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AES Corporation

AES CorporationAES決算レポート

NYSE · 公益事業 · 複合発電サービス及び小規模発電業者

The AES Corporation is an American utility and power generation company. It owns and operates power plants, which it uses to generate and sell electricity to end users and intermediaries like utilities and industrial facilities. AES, headquartered in Arlington, Virginia, is one of the world's leading power companies, generating and distributing electric power in 15 countries and employing 10,500 people worldwide. AES Corporation is a global Fortune 500 power company.

What changed in AES Corporation's 10-K — 2024 vs 2025

Top changes in AES Corporation's 2025 10-K

830 paragraphs added · 783 removed · 579 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

273 edited+85 added−101 removed186 unchanged
In short-term sales and in certain contract sales, our plants must be reliable and flexible to capture peak market prices and to maximize market-based revenues. In addition, our flexibility allows us to capture ancillary service revenue while meeting local market needs. Fuel Costs — For our thermal generation plants, fuel is a significant component of our total cost of generation.
In short-term sales and certain contract sales, our plants must be reliable and flexible to capture peak market prices and to maximize market-based revenues. In addition, our flexibility allows us to capture ancillary service revenue while meeting local market needs. Fuel Costs — For our thermal generation plants, fuel is a significant component of our total cost of generation.
Our Utilities SBU participates in our second business line, utilities, in which we own and/or operate utilities to generate or purchase, distribute, transmit and sell electricity to end-user customers in the residential, commercial, industrial and governmental sectors within a defined service area. In certain circumstances, our utilities also generate and sell electricity on the wholesale market.
Our Utilities SBU participates in our second business line, utilities, in which we own and/or operate utilities to generate or purchase, transmit, distribute, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors within a defined service area. In certain circumstances, our utilities also generate and sell electricity on the wholesale market.
AES Colombia Business Description — W e operate in Colombia through AES Colombia, a subsidiary of AES Andes, which owns Chivor, a hydroelectric plant with an installed capacity of 1,000 MW and Tunjita, a 20 MW run-of-river hydroelectric plant, both located approximately 100 miles east of Bogota, as well as the solar facilities of Castilla, Brisas, and San Fernando, 21 MW, 26 MW, and 61 MW respectively.
AES Colombia Business Description — W e operate in Colombia through AES Colombia, a subsidiary of AES Andes, which owns Chivor, a hydroelectric plant with an installed capacity of 1,000 MW and Tunjita, a 20 MW run-of-river hydroelectric plant, both located approximately 100 miles east of Bogota, as well as the Castilla, Brisas, and San Fernando solar facilities with capacity of 21 MW, 26 MW, and 61 MW, respectively.
The Company often has used advanced generation technologies in order to minimize environmental impacts, such as combined fluidized bed boilers and advanced gas turbines, and environmental control devices such as flue gas desulphurization for SO 2 emissions and selective catalytic reduction for NO x emissions.
The Company has often used advanced generation technologies in order to minimize environmental impacts, such as combined fluidized bed boilers and advanced gas turbines, and environmental control devices such as flue gas desulphurization for SO 2 emissions and selective catalytic reduction for NO x emissions.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • forced outages; • exposure to fluctuations of the Argentine peso; • timely collection of FONINVEMEM installments and outstanding receivables (see International Energy Markets and Regulatory Environment below); • natural gas prices and availability for contracted generation at TermoAndes; and • domestic energy demand and exports.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • forced outages; • exposure to fluctuations of the Argentine peso; • timely collection of FONINVEMEM installments and outstanding receivables (see Energy Markets and Regulatory Environment below); • natural gas prices and availability for contracted generation at TermoAndes; and • domestic energy demand and exports.
Beginning in June 2020, AES Indiana files an annual TDSIC rate adjustment for a return on, and of, investments through March 31 with rates requested to be effective each November. Annual TDSIC plan update filings are required to be staggered by six months as ordered by the IURC and are filed each December.
Beginning in June 2020, AES Indiana files an annual TDSIC rate adjustment for a return on, and of, investments through March 31 with rates requested to be effective each November. Annual TDSIC plan update filings are required to be staggered with the TDSIC rider rate filings by six months as ordered by the IURC and are filed each December.
Any change in availability has a direct impact on financial performance. Some plants are eligible for availability bonuses if they meet certain requirements. Coal and natural gas are used as the primary fuels. Coal prices are set by market factors internationally, while natural gas prices are generally set domestically.
Any change in availability has a direct impact on financial performance. Some plants are eligible for availability bonuses if they meet certain requirements. Coal and natural gas are used as primary fuels. Coal prices are set by market factors internationally, while natural gas prices are generally set domestically.
Coughlin joined AES in 2007 and spent his early years with the company leading Financial Planning & Analysis for AES’ renewables portfolio. Mr. Coughlin is a member of the boards of AES Clean Energy Development Holdings, LLC, AES U.S. Investments, Inc., AES U.S. Generation, LLC, and IPALCO. Mr.
Coughlin joined AES in 2007 and spent his early years with the company leading Financial Planning & Analysis for AES’ renewables portfolio. Mr. Coughlin is a member of the boards of AES Clean Energy Development Holdings, LLC, AES U.S. Investments, Inc., and IPALCO. Mr.
Freedman is a member of the Boards of, AES U.S. Investments, Inc., IPALCO, AES Ohio, and AES Southland Energy Holdings, LLC. Additionally, Mr. Freedman is a member of the Boards of the Business Council for International Understanding and the Coalition for Integrity. Prior to joining AES, Mr. Freedman was Chief Counsel for credit programs at the U.S.
Freedman is a member of the Boards of, AES U.S. Investments, Inc., IPALCO, and AES Southland Energy Holdings, LLC. Additionally, Mr. Freedman is a member of the Boards of the Business Council for International Understanding and the Coalition for Integrity. Prior to joining AES, Mr. Freedman was Chief Counsel for credit programs at the U.S.
Customers whose connected demand capacity is higher than 5 MW are excluded from the regulated market and are referred to as unregulated customers. Customers with connected capacity between 0.5 MW and 5 MW can opt for regulated or unregulated contracts for a minimum period of four years.
Customers whose connected demand capacity is higher than 5 MW are excluded from the regulated market and are referred to as unregulated customers. Customers with connected capacity between 0.3 MW and 5 MW can opt for regulated or unregulated contracts for a minimum period of four years.
AES Ohio's retail rates include various adjustment mechanisms including, but not limited to, the timely recovery of costs incurred related to power purchased through the competitive bid process, participation in the PJM RTO, severe storm damage, and energy efficiency. The costs associated with providing high voltage transmission service and wholesale electric sales and ancillary services are subject to FERC jurisdiction.
AES Ohio's retail rates include various adjustment mechanisms including, but not limited to, the timely recovery of costs incurred related to power purchased through the competitive bid process, participation in the PJM RTO, severe storm damage, and energy efficiency. The costs associated with providing wholesale transmission service, wholesale electric sales, and ancillary services are subject to FERC jurisdiction.
Fluence and Uplight are unconsolidated entities and their results are reported in Net equity in losses of affiliates on our Consolidated Statements of Operations. 5B is accounted for using the measurement alternative and AES will record income or loss only when it receives dividends from 5B or when there is a change in the observable price or an impairment of the investment.
Fluence, the AI Fund, and Uplight are unconsolidated entities and their results are reported in Net equity in losses of affiliates on our Consolidated Statements of Operations. 5B is accounted for using the measurement alternative and AES will record income or loss only when it receives dividends from 5B or when there is a change in the observable price or an impairment of the investment.
For non-collectively bargained employees at certain levels in the organization, we offer annual incentives (bonus) and long-term compensation to reinforce the alignment between AES' employees and AES. Executive Officers The following individuals are our executive officers: Stephen Coughlin, 53 years old, has served as Executive Vice President and Chief Financial Officer since October 2021.
For non-collectively bargained employees at certain levels in the organization, we offer annual incentives (bonus) and long-term compensation to reinforce the alignment between AES' employees and AES. Executive Officers The following individuals are our executive officers: Stephen Coughlin, 54 years old, has served as Executive Vice President and Chief Financial Officer since October 2021.
Ms. Mendoza is a member of the boards of IPALCO, Fluence Energy, Inc. and AES Ohio, and sits on AES’ compensation and benefits committees. Prior to joining AES, Ms.
Ms. Mendoza is a member of the boards of IPALCO, and Fluence Energy, Inc., and sits on AES’ compensation and benefits committees. Prior to joining AES, Ms.
Those standards may be explicit, with defined performance incentives or penalties, or implicit, where the utility must operate to meet customer and/or regulator expectations. Development and Construction We develop and construct new generation facilities. For our utility business, new plants may be built or existing plants retrofitted in response to customer needs or to comply with regulatory developments.
Those standards may be explicit, with defined performance incentives or penalties, or implicit, where the utility must operate to meet customer and/or regulator expectations. Development and Construction We develop and construct new generation facilities. For our utility businesses, new plants may be built or existing plants retrofitted in response to customer needs or to comply with regulatory developments.
CFE is the offtaker for IPP generators, and together with its own power units has more than 50% of the current generation market share. Mexico has an installed capacity of 89 GW, composed of thermal (64%), hydroelectric (14%), wind (8%), solar (8%), and other fuel (6%) generation.
CFE is the offtaker for IPP generators, and together with its own power units has more than 50% of the current generation market share. Mexico has an installed capacity of 92 GW, composed of thermal (64%), hydroelectric (14%), solar (8%), wind (8%), and other fuel (6%) generation.
Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions. We measure the operating performance of our SBUs using Adjusted EBITDA, a non-GAAP measure. The Adjusted EBITDA by SBU for the year ended December 31, 2024 is shown below.
Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions. We measure the operating performance of our SBUs using Adjusted EBITDA, a non-GAAP measure. The Adjusted EBITDA by SBU for the year ended December 31, 2025 is shown below.
AES El Salvador owns and operates four solar farms, Opico Power, Moncagua, and Metapan with 4 MW, 3 MW and 15 MW of capacity, respectively; Meanguera del Golfo, a solar and battery storage facility with 1 MW capacity; AES Nejapa, a biomass power plant with 6 MW capacity; and 50% of Bosforo and Cuscatlan Solar, solar farms with 100 MW and 10 MW capacity, respectively.
AES El Salvador owns and operates four solar farms: Opico Power, Moncagua, and Metapan with 4 MW, 3 MW, and 15 MW of capacity, respectively, and Meanguera del Golfo, a solar and battery storage facility with 1 MW capacity; as well as AES Nejapa, a biomass power plant with 6 MW capacity; and 50% of Bosforo and Cuscatlan, solar farms with 100 MW and 10 MW capacity, respectively.
Decarbonization Strategy — The Chilean government’s decarbonization plan includes the complete retirement of the SEN coal fleet by the end of 2040 and carbon neutrality by 2050.
Decarbonization — The Chilean government’s decarbonization plan includes the complete retirement of the SEN coal fleet by the end of 2040 and carbon neutrality by 2050.
With the exception of our plants in the Dominican Republic and Panama, where we import LNG to utilize in the local market, we use gas from local suppliers in each market. 16% of the capacity of our generation fleet is coal-fired. In the U.S., most of our coal-fired plants are supplied from domestic coal.
With the exception of our plants in the Dominican Republic and Panama, where we import LNG to utilize in the local market, we use gas from local suppliers in each market. 15% of the capacity of our generation fleet is coal-fired. In the U.S., most of our coal-fired plants are supplied from domestic coal.
The following is a summary of the environmental regulatory issues that were formalized in 2024: • Renewable energy projects with an installed capacity equal to or greater than 50 MW will be licensed by ANLA.
The following is a summary of the environmental regulatory issues that were formalized in 2024 and 2025: • Renewable energy projects with an installed capacity equal to or greater than 50 MW will be licensed by ANLA.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • changes in spot prices due to fluctuations in commodity prices (since fuel is a pass-through cost under the PPAs, any variation in oil prices will impact spot sales for Andres and Los Mina); • expiring PPAs, lower contracting levels and the extent of capacity awarded; and • growth in domestic natural gas demand, supported by new infrastructure such as the Eastern Pipeline and second LNG tank.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: 34 | 2025 Annual Report • changes in spot prices due to fluctuations in commodity prices (since fuel is a pass-through cost under the PPAs, any variation in oil prices will impact spot sales for Andres and Los Mina); • expiring PPAs, lower contracting levels, and the extent of capacity awarded; and • growth in domestic natural gas demand, supported by new infrastructure such as the Eastern Pipeline and second LNG tank.
AES Ohio is a utility company that transmits and distributes electricity to approximately 537,000 retail customers in a 6,000 square mile area of West Central Ohio and is subject to regulatory authority—see Regulatory Framework and Market Structure below.
AES Ohio is a utility company that transmits and distributes electricity to approximately 541,000 retail customers in a 6,000 square mile area of West Central Ohio and is subject to regulatory authority—see Regulatory Framework and Market Structure below.
Smart Grid Comprehensive Settlement — On October 23, 2020, AES Ohio entered into a Stipulation and Recommendation (the Settlement) with the staff of the PUCO, various customers and organizations representing customers of AES Ohio and certain other parties with respect to, among other matters, AES Ohio's applications pending at the PUCO for (i) approval of AES Ohio's plan to modernize its distribution grid (Smart Grid Phase 1), (ii) findings that DP&L passed the SEET for 2018 and 2019, and (iii) findings that AES Ohio's ESP 1 satisfies the SEET and the more favorable in the aggregate (MFA) regulatory test.
Smart Grid Comprehensive Settlement — On October 23, 2020, AES Ohio entered into a Stipulation and Recommendation (the Settlement) with the staff of the PUCO, various customers and organizations representing customers of AES Ohio and certain other parties with respect to, among other matters, AES Ohio's applications for (i) approval of AES Ohio's plan to modernize its distribution grid (Smart Grid Phase 1), (ii) findings that AES Ohio passed the SEET for 2018 and 2019, and (iii) findings that AES Ohio's ESP 1 satisfies the SEET and the more favorable in the aggregate (MFA) regulatory test.
NAAQS — Under the CAA, the EPA sets NAAQS for six principal pollutants considered harmful to public health and the environment, including ozone, particulate matter, NO X , and SO 2 , which result from fossil-fuel combustion.
NAAQS — Under the CAA, the EPA sets NAAQS for six criteria pollutants considered harmful to public health and the environment, including ozone, particulate matter, NO X , and SO 2 , which result from fossil-fuel combustion.
It is too early to determine whether any outcome of litigation or current or future revisions to the ELG rule might have a material impact on our business, financial condition, and results of operations. On April 23, 2020, the U.S. Supreme Court issued a decision in the Hawaii Wildlife Fund v.
The rule is subject to legal challenges. It is too early to determine whether any outcome of litigation or current or future revisions to the ELG rule might have a material impact on our business, financial condition, and results of operations. On April 23, 2020, the U.S. Supreme Court issued a decision in the Hawaii Wildlife Fund v.
The rule established nationally applicable minimum criteria for the disposal of CCR in new and currently operating CCR landfills and CCR surface impoundments, including location restrictions, design and operating criteria, groundwater monitoring, corrective action and closure requirements, and post-closure care.
The rule established nationally applicable minimum criteria for the disposal of CCR in new and existing CCR landfills and CCR surface impoundments, including location restrictions, design and operating criteria, groundwater monitoring, corrective action and closure requirements, and post-closure care.
AES Colombia’s installed capacity accounted for approximately 5% of system capacity at the end of 2024. AES Colombia is dependent on hydrological conditions, which influence generation and spot prices of non-contracted generation in Colombia.
AES Colombia’s installed capacity accounted for approximately 5% of system capacity at the end of 2025. AES Colombia is dependent on hydrological conditions, which influence generation and spot prices of non-contracted generation in Colombia.
If Southland Energy exercises the annual put option, all capacity, energy and ancillary services will be sold to SCE in exchange for a monthly energy and fixed capacity payment that covers fixed operating cost, debt service, and return on capital. In addition, SCE will reimburse variable costs and provide the natural gas.
If Southland Energy exercises the annual put option, all capacity, energy, and ancillary services will be sold 31 | 2025 Annual Report to SCE in exchange for a monthly energy and fixed capacity payment that covers fixed operating cost, debt service, and return on capital. In addition, SCE will reimburse variable costs and provide the natural gas.
The compliance costs of the Company's U.S. subsidiaries could be material. 47 | 2024 Annual Report Mercury and Air Toxics Standard — In April 2012, the EPA’s rule to establish maximum achievable control technology standards for hazardous air pollutants regulated under the CAA emitted from coal and oil-fired electric utilities, known as “MATS”, became effective and AES facilities implemented measures to comply, as applicable.
The compliance costs of the Company's U.S. subsidiaries could be material. 44 | 2025 Annual Report Mercury and Air Toxics Standard — In April 2012, the EPA’s rule to establish maximum achievable control technology standards for hazardous air pollutants regulated under the CAA emitted from coal and oil-fired electric utilities, known as “MATS”, became effective and AES facilities implemented measures to comply, as applicable.
Private companies operate in all three segments, and generators can enter into PPAs to sell energy to regulated and unregulated customers, as well as to other generators in the spot market. Chile operates in a single power market, referred to as the SEN, which is managed by the grid operator CEN.
Private companies operate in all three segments, and generators can enter into PPAs to sell energy to regulated and unregulated customers, as well as to other generators in the spot market. Chile operates in a single power market, referred to as the SEN, which is managed by the grid operator Coordinador Electrico Nacional ("CEN").
AES Southland Business Description — AES Southland is one of the largest generation operators in California by aggregate installed capacity, with an installed gross capacity of 2,823 MW at the end of 2024.
AES Southland Business Description — AES Southland is one of the largest generation operators in California by aggregate installed capacity, with an installed gross capacity of 2,823 MW at the end of 2025.
Supreme Court issued an order granting a stay of the EPA’s 2023 FIP pending resolution of legal challenges to the FIP. 46 | 2024 Annual Report On November 6, 2024, the EPA published in the Federal Register an Interim Final Rule in response to the U.S.
Supreme Court issued an order granting a stay of the EPA’s 2023 FIP pending resolution of legal challenges to the FIP. 43 | 2025 Annual Report On November 6, 2024, the EPA published an Interim Final Rule in the Federal Register in response to the U.S.
AES Indiana and AES Ohio are now two of the fastest growth U.S. utilities, with projected double-digit rate base growth through 2027, based on necessary investments for our customers. We are also seeing additional investment opportunities from data center growth in our utility service areas, above and beyond existing rate base projections.
AES Indiana and AES Ohio are now two of the fastest growth U.S. utilities, with projected double-digit rate base growth through 2027, based on necessary investments for our 6 | 2025 Annual Report customers. We are also seeing additional investment opportunities from data center growth in our utility service areas, above and beyond existing rate base projections.
Electromobilty is also being promoted by AES Soluciones through a partnership with Blink Charger in order to design and deploy a private network of electric chargers throughout the country. AES Next, Ltda de C.V. is the O&M services provider for the Bosforo project, as well as a developer of solar MW in El Salvador.
Electromobility is also being promoted by AES Soluciones through a partnership with Blink Charger in order to design and deploy a private network of electric chargers throughout the country. AES Next, Ltda de C.V. is the O&M services provider for the Bosforo solar farm, as well as a developer of solar MW in El Salvador.
These certifications are included as exhibits to this Annual Report on Form 10-K. Our CEO provided a certification pursuant to Section 303A of the New York Stock Exchange Listed Company Manual on May 16, 2024. Our Code of Business Conduct ("Code of Conduct") and Corporate Governance Guidelines have been adopted by our Board of Directors.
These certifications are included as exhibits to this Annual Report on Form 10-K. Our CEO provided a certification pursuant to Section 303A of the New York Stock Exchange Listed Company Manual on May 20, 2025. Our Code of Business Conduct ("Code of Conduct") and Corporate Governance Guidelines have been adopted by our Board of Directors.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • contracting levels, providing additional benefits from improved operational performance, including performance incentives and/or excess energy sales; • changes in the methodology to calculate spot energy prices or Locational Marginal Prices, which impacts the excess energy sales; • improved operational performance and plant availability; and 20 | 2024 Annual Report • changes in wind resources.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • contracting levels, providing additional benefits from improved operational performance, including performance incentives and/or excess energy sales; • changes in the methodology to calculate spot energy prices or Locational Marginal Prices, which impacts the excess energy sales; • improved operational performance and plant availability; and • changes in wind resources.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • contracting levels, providing additional benefits from improved operational performance, including performance incentives and/or excess energy sales; • changes in the methodology to calculate spot energy prices or Locational Marginal Prices, which impacts the excess energy sales to the CFE (see International Energy Markets and Regulatory Environment below) in TEG and TEP under self-supply scheme; and • improved operational performance and plant availability.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • contracting levels, providing additional benefits from improved operational performance, including performance incentives and/or excess energy sales; 33 | 2025 Annual Report • changes in the methodology to calculate spot energy prices or Locational Marginal Prices, which impacts the excess energy sales to the CFE (see Energy Markets and Regulatory Environment below) in TEG and TEP under self-supply scheme; and • improved operational performance and plant availability.
See Item 7.— Management’s Discussion and Analysis of Financial Condition and Results of Operations —SBU Performance Analysis—Non-GAAP Measures for reconciliation and definition. 14 | 2024 Annual Report Renewables Our Renewables SBU is well-positioned to take advantage of the growth in data centers driven by the increase in power demand for generative artificial intelligence.
See Item 7.— Management’s Discussion and Analysis of Financial Condition and Results of Operations —SBU Performance Analysis—Non-GAAP Measures for reconciliation and definition. 12 | 2025 Annual Report Renewables Our Renewables SBU is well-positioned to take advantage of the growth in data centers driven by the increase in power demand for generative artificial intelligence.
Maritza is contracted under a 15-year PPA that expires in May 2026. AES Maritza is collecting receivables from NEK in a timely manner. However, NEK's liquidity position is subject to political conditions and regulatory changes in Bulgaria. 37 | 2024 Annual Report The DG Comp is reviewing NEK’s PPA with AES Maritza pursuant to the European Union’s state aid rules.
Maritza is contracted under a 15-year PPA that expires in May 2026. AES Maritza is collecting receivables from NEK in a timely manner. However, NEK's liquidity position is subject to political conditions and regulatory changes in Bulgaria. The DG Comp is reviewing NEK’s PPA with AES Maritza pursuant to the European Union’s state aid rules.
They are responsible for implementing the economic dispatch of electricity in the wholesale market. The National Dispatch Center's objectives are to minimize the total cost of generation and maintain the reliability and security of the electric power system. Short-term power prices are 42 | 2024 Annual Report determined on an hourly basis by the last dispatched generating unit.
They are responsible for implementing the economic dispatch of electricity in the wholesale market. The National Dispatch Center's objectives are to minimize the total cost of generation and maintain the reliability and security of the electric power system. Short-term power prices are 39 | 2025 Annual Report determined on an hourly basis by the last dispatched generating unit.
Rubiolo has a Science Degree in Business from the Universidad Austral of Argentina, a Master of Project Management from the Quebec University in Canada and has completed the executive business and leadership program at the University of Virginia. 55 | 2024 Annual Report How to Contact AES and Sources of Other Information Our principal offices are located at 4300 Wilson Boulevard, Arlington, Virginia 22203.
Rubiolo has a Science Degree in Business from the Universidad Austral of Argentina, a Master of Project Management from the Quebec University in Canada and has completed the executive business and leadership program at the University of Virginia. How to Contact AES and Sources of Other Information Our principal offices are located at 4300 Wilson Boulevard, Arlington, Virginia 22203.
Following the sale of approximately 26% ownership interest in both plants on March 28, 2024, Amman East and IPP4 were deconsolidated and are accounted for as equity method investments. 38 | 2024 Annual Report New Energy Technologies Our New Energy Technologies SBU encompasses AES' efforts to incubate innovative solutions and invest in businesses that leverage cutting-edge technology to provide greener and smarter energy solutions, accelerating the energy transition.
Following the sale of approximately 26% ownership interest in both plants in March 2024, Amman East and IPP4 were deconsolidated and are accounted for as equity method investments. 35 | 2025 Annual Report New Energy Technologies Our New Energy Technologies SBU encompasses AES' efforts to incubate innovative solutions and invest in businesses that leverage cutting-edge technology to provide greener and smarter energy solutions, accelerating the energy transition.
Our project debt may consist of both fixed and floating rate debt for which we typically hedge a significant portion of our exposure. Some of our contracted businesses also receive a regulated market-based capacity payment, which is discussed in more detail in the Short-Term Sales section below.
Our project debt may 7 | 2025 Annual Report consist of both fixed and floating rate debt for which we typically hedge a significant portion of our exposure. Some of our contracted businesses also receive a regulated market-based capacity payment, which is discussed in more detail in the Short-Term Sales section below.
AES Colombia's commercial strategy aims to execute contracts with commercial and industrial customers and bid in public tenders, mainly with distribution companies, in order to reduce margin volatility with proper portfolio risk management. The remaining energy generated by our portfolio is sold to the spot market, including ancillary 19 | 2024 Annual Report services.
AES Colombia's commercial strategy aims to execute contracts with commercial and industrial customers and bid in public tenders, mainly with distribution companies, in order to reduce margin volatility with proper portfolio risk management. The remaining energy generated by our portfolio is sold to the spot market, including ancillary services.
The final step, which is yet to be implemented, is the creation of the Electricity Retail Market, in which non-EVN-owned buyers would be allowed, and direct sales and 44 | 2024 Annual Report purchases between retailers and generators would be feasible. The Mong Duong 2 power plant is a BOT plant and does not directly participate in the electricity market.
The final step, which is yet to be implemented, is the creation of the Electricity Retail Market, in which non-EVN-owned buyers would be allowed, and direct sales and purchases between retailers and generators would be feasible. The Mong Duong 2 power plant is a BOT plant and does not directly participate in the electricity market.
Rubiolo served as Executive Vice President and President of International Businesses from January 2022 to March 2023, Senior Vice President and President of the MCAC SBU from March 2018 to January 2022, as the Chief Executive Officer of AES Mexico from 2014 to March 2018, and as a Vice President of the Commercial team of the MCAC SBU from 2013 to 2014.
Rubiolo served as Executive Vice President and President of the Energy Infrastructure SBU since March 2023, Executive Vice President and President of International Businesses from January 2022 to March 2023, Senior Vice President and President of the MCAC SBU from March 2018 to January 2022, as the Chief Executive Officer of AES Mexico from 2014 to March 2018, and as a Vice President of the Commercial team of the MCAC SBU from 2013 to 2014.
The allowed rate of return and operating expenses deemed reasonable by the regulator are recovered through the regulated tariff that the utility charges to its customers. 11 | 2024 Annual Report The tariff may be reviewed and reset by the regulator from time to time depending on local regulations, or the utility may seek a change in its tariffs.
The allowed rate of return and operating expenses deemed reasonable by the regulator are recovered through the regulated tariff that the utility charges to its customers. The tariff may be reviewed and reset by the regulator from time to time depending on local regulations, or the utility may seek a change in its tariffs.
The regulated tariff generally recognizes that our utility businesses should recover certain operating and fixed costs, as well as manage uncollectible amounts, quality of service and technical and non-technical losses. Utilities, therefore, need to manage costs to the levels reflected in the tariff, or risk non-recovery of costs or diminished returns.
The regulated tariff generally recognizes that our utility businesses should recover certain operating and fixed costs, as well as manage uncollectible amounts, quality of service, and technical and non-technical losses. Utilities, 9 | 2025 Annual Report therefore, need to manage costs to the levels reflected in the tariff, or risk non-recovery of costs or diminished returns.
Prior to joining AES in 2000, Mr. Da Santos held a number of financial leadership positions at EDC. Mr. Da Santos is President and Chief Executive Officer of ACED, and a member of the boards of IPALCO, AES Andes, AES Mong Duong Power Co. Ltd., and Son My LNG Terminal LLC. Mr.
Prior to joining AES in 2000, Mr. Da Santos held a number of financial leadership positions at EDC. Mr. Da Santos is President and Chief Executive Officer of AES Clean Energy Development, and a member of the boards of IPALCO, AES Andes, AES Mong Duong Power Co. Ltd., and Son My LNG Terminal LLC. Mr.
Utilities See Item 1.— Business—Segments—Utilities for further discussion of the energy markets and regulatory environment of our utilities in the U.S. — AES Indiana and AES Ohio. 45 | 2024 Annual Report Environmental and Land-Use Regulations The Company faces certain risks and uncertainties related to numerous environmental laws and regulations, including existing and potential GHG legislation or regulations, and actual or potential laws and regulations pertaining to water discharges, waste management (including disposal of coal combustion residuals), and certain air emissions, such as SO 2 , NO X , particulate matter, mercury, and other hazardous air pollutants.
Utilities See Item 1.— Business—Segments—Utilities for further discussion of the energy markets and regulatory environment of our utilities in the U.S. — AES Indiana and AES Ohio. 42 | 2025 Annual Report Environmental and Land-Use Regulations The Company faces certain risks and uncertainties related to numerous environmental laws and regulations, including existing and potential GHG legislation or regulations, and actual or potential laws and regulations pertaining to water discharges, waste management (including disposal of coal combustion residuals), species and habitat protections, and certain air emissions, such as SO 2 , NO X , particulate matter, mercury, and other hazardous air pollutants.
See Item 7.— Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 19— Segment and Geographic Information included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further discussion of the Company's segment structure. 13 | 2024 Annual Report (1) Non-GAAP measure.
See Item 7.— Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 19— Segment and Geographic Information included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further discussion of the Company's segment structure. 11 | 2025 Annual Report (1) Non-GAAP measure.
Conducting safe operations at our facilities around the world, so that each person can return home safely, is the cornerstone of our daily activities and decisions. Safety efforts are led by our Chief Operating Officer and supported by safety committees that operate at the local site level.
Safety At AES, safety is one of our core values. Conducting safe operations at our facilities around the world, so that each person can return home safely, is the cornerstone of our daily activities and decisions. Safety efforts are led by our Chief Operating Officer and supported by safety committees that operate at the local site level.
Our thermal asset in Panama has PPAs with distribution companies for a total contracted capacity of 350 MW expiring in August 2028, which matches the term of the LNG supply agreement of such thermal assets.
Colon in Panama has PPAs with distribution companies for a total contracted capacity of 350 MW expiring in August 2028, which matches the term of the LNG supply agreement of such thermal assets.
AES Ohio's wholesale sales and SSO utility sales, which are sales to utility customers who use AES Ohio to source their electricity through a competitive bid process, were 2,440 GWh in 2024. AES Ohio owns a 4.9% equity ownership in OVEC, an electric generating company.
AES Ohio's wholesale sales and SSO utility sales, which are sales to utility customers who use AES Ohio to source their electricity through a competitive bid process, were 2,740 GWh in 2025. AES Ohio owns a 4.9% equity ownership in OVEC, an electric generating company.
Each of these tariff rate components function somewhat independently of one another, but the overall structure of AES Indiana's rates is subject to review at the time of any review of AES Indiana's basic rates and charges. Additionally, AES Indiana's rider recoveries are reviewed through recurring filings.
Each of these tariff rate 24 | 2025 Annual Report components function somewhat independently of one another, but the overall structure of AES Indiana's rates is subject to review at the time of any review of AES Indiana's basic rates and charges. Additionally, AES Indiana's rider recoveries are reviewed through recurring filings.
The main funding component of NGEU is the EU’s Recovery and Resilience Facility ("RRF"). In November 2023, the European Commission approved an amended version of Bulgaria's Recovery and 51 | 2024 Annual Report Resilience Plan ("RRP") that describes the reforms and investments which Bulgaria wishes to make with the support of the RRF.
The main funding component of NGEU is the EU’s Recovery and Resilience Facility ("RRF"). In November 2023, the European Commission approved an amended version of Bulgaria's Recovery and Resilience Plan ("RRP") that describes the reforms and investments which Bulgaria wishes to make with the support of the RRF.
The SMS requires continuous safety performance monitoring, risk assessment, and performance of periodic integrated environmental, health, and safety audits. The SMS provides a consistent framework for all AES operational businesses and construction projects to set expectations for risk identification and reduction, measure performance, and drive continuous 53 | 2024 Annual Report improvements.
The SMS requires continuous safety performance monitoring, risk assessment, and performance of periodic integrated environmental, health, and safety audits. The SMS provides a consistent framework for all AES operational businesses and construction projects to set expectations for risk identification and reduction, measure performance, and drive continuous improvements.
AES El Salvador Business Description — AES El Salvador is the majority owner of four of the five distribution companies operating in El Salvador (CAESS, CLESA, EEO and DEUSEM). AES El Salvador's territory covers 77% of the country and accounted for 4,499 GWh of the market energy sales during 2024.
AES El Salvador Business Description — AES El Salvador is the majority owner of four of the five distribution companies operating in El Salvador (CAESS, CLESA, EEO, and DEUSEM). AES El Salvador's territory covers 77% of the country and accounted for 4,744 GWh of the market energy sales during 2025.
Mendoza was Senior Vice President, Global Human Resources and Internal Communications and Chief Human Resources Officer from 2012, Vice President of Human Resources, Global Utilities from 2011 to 2012, Vice President of Global Compensation, Benefits and HRIS, including Executive Compensation, from 2008 to 2011, and acted in the same capacity as the Director of the function from 2006 to 2008.
Mendoza was Senior Vice President, Global Human Resources and Internal Communications and Chief Human Resources Officer from 2012, Vice President of Human Resources, Global Utilities from 2011 to 2012, Vice President of Global Compensation, Benefits and HRIS, including Executive Compensation, from 2008 to 2011, and acted in the same capacity as the Director of the 51 | 2025 Annual Report function from 2006 to 2008.
It is too early to determine the potential impacts of this proposal rule. Further rulemakings and/or proceedings are possible; however, in the meantime, MATS remains in effect. We currently cannot predict the outcome of the regulatory or judicial process, or its impact, if any, on our MATS compliance planning or ultimate costs.
We are still reviewing the final rule, and it is too early to determine the potential impacts. Further rulemakings and/or proceedings are possible; however, in the meantime, MATS remains in effect. We currently cannot predict the outcome of the regulatory or judicial process, or its impact, if any, on our MATS compliance planning or ultimate costs.
Based on certain liquidation provisions of the tax equity structures, this could result in variability to earnings attributable to AES compared to the earnings reported at the facilities. In 2024, AES Clean Energy largely generated investment tax credits ("ITCs") from its renewables assets.
Based on certain liquidation provisions of the tax equity structures, this could result in variability to earnings attributable to AES compared to the earnings reported at the facilities. In 2025, AES Clean Energy largely generated investment tax credits ("ITCs") from its renewable assets.
In addition, financial results are likely to be driven by many factors, including, but not limited to: • spot market prices (largely impacted by dry hydrology scenarios, forced outages, and international fuel prices); • changes in current regulatory rulings altering the ability to pass through or recover certain costs; • fluctuations of the Chilean peso; • tax policy changes; and • legislation promoting renewable energy and/or more restrictive regulations on thermal generation assets .
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • spot market prices (largely impacted by dry hydrological scenarios, forced outages, and international fuel prices); • changes in current regulatory rulings altering the ability to pass through or recover certain costs; • fluctuations of the Chilean peso; • tax policy changes; and • legislation promoting renewable energy and/or more restrictive regulations on thermal generation assets .
Overview Generation We currently own and/or operate a generation portfolio of 32,109 MW, including generation from our integrated utility, AES Indiana. Our generation fleet is diversified by technologies and fuel type. See discussion below under Fuel Costs .
Overview Generation We currently own and/or operate a generation portfolio of 34,740 MW, including generation from our integrated utility, AES Indiana. Our generation fleet is diversified by technologies and fuel type. See discussion below under Fuel Costs .
On May 8, 2024, the EPA published final revisions to the CCR rule which expand the scope of CCR units regulated by the CCR Rule to include legacy surface impoundments, inactive surface impoundments, and CCR management units. The May 8, 2024 revisions to the CCR Rule are currently subject to legal challenges and on November 1, 2024, the D.C.
On May 8, 2024, the EPA published final revisions to the CCR rule which expand the scope of CCR units regulated by the CCR Rule to include legacy surface impoundments, inactive surface impoundments, and CCR management units. The May 8, 2024 revisions to the CCR Rule are currently subject to legal challenges.
Our Renewables, Utilities, and Energy Infrastructure SBUs participate in our first business line, generation, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries.
We have two lines of business: generation and utilities. Our Renewables, Utilities, and Energy Infrastructure SBUs participate in our first business line, generation, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries.
Furthermore, the four distribution companies operated by AES El Salvador started a digitization and modernization initiative as part of the development, sustainability, and growth strategy of the business. 30 | 2024 Annual Report (1) Non-GAAP measure.
Furthermore, the four distribution companies operated by AES El Salvador started a digitization and modernization initiative as part of the development, sustainability, and growth strategy of the business. 28 | 2025 Annual Report (1) Non-GAAP measure.
The SEN has an installed capacity of 35,461 MW and represents 99% of the installed generation capacity of the country. CEN coordinates all generation and transmission companies in the SEN. CEN minimizes the operating costs of the electricity system, while maximizing service quality and reliability requirements.
The SEN has an installed capacity of 34,931 MW and represents 99% of the installed generation capacity of the country. CEN coordinates all generation and transmission companies in the SEN. CEN minimizes the operating costs of the electricity system, while maximizing service quality and reliability requirements.
Development Strategy — In order to explore new business opportunities, AES El Salvador created AES 29 | 2024 Annual Report Soluciones, an LED public lighting service provider and the main commercial and industrial solar photovoltaic EPC provider in the country.
Development Strategy — In order to explore new business opportunities, AES El Salvador created AES Soluciones, an LED public lighting service provider and the main commercial and industrial solar photovoltaic EPC provider in the country.
The Trump Administration also issued a Memorandum titled “ Regulatory Freeze Pending Review ” 50 | 2024 Annual Report directing Agencies to refrain from proposing or issuing any rules until the Trump Administration has reviewed and approved those rules.
The Trump Administration also issued a Memorandum titled “ Regulatory Freeze Pending Review ” directing Agencies to refrain from proposing or issuing any rules until the Trump Administration has reviewed and approved those rules.
For further information regarding commodity price risk please see Item 7A.— Quantitative and Qualitative Disclosures about Market Risk in this Form 10-K. 10 | 2024 Annual Report 50% of the capacity of our generation plants is fueled by renewables, including solar, hydro, wind, energy storage and landfill gas, which do not have significant fuel costs. 32% of the capacity of our generation plants is fueled by natural gas.
For further information regarding commodity price risk please see Item 7A.— Quantitative and Qualitative Disclosures about Market Risk in this Form 10-K. 54% of the capacity of our generation plants is fueled by renewables, including solar, hydro, wind, energy storage, and landfill gas, which do not have significant fuel costs. 29% of the capacity of our generation plants is fueled by natural gas.
Puerto Rico's electricity is 93% produced by thermal plants (48% from petroleum, 37% from natural gas, and 8% from coal), while the remaining 7% is supplied by renewable sources (wind and solar). Jordan The Jordan electricity transmission market is a single-buyer model with the state-owned National Electric Power Company ("NEPCO") responsible for transmission.
Puerto Rico's electricity is 95% produced by thermal plants (50% from petroleum, 37% from natural gas, and 8% from coal), while the remaining 5% is supplied by renewable sources (wind and solar). Jordan The Jordan electricity transmission market is a single-buyer model with the state-owned National Electric Power Company ("NEPCO") responsible for transmission.
These activities enhance AES' competitive advantages in its businesses while enabling the growth of new business platforms. This segment includes ownership stakes in third-party platforms and internally developed initiatives, such as investments in Fluence, Uplight, 5B, and other ventures.
These activities enhance AES' competitive advantages in its businesses while enabling the growth of new business platforms. This segment includes ownership stakes in third-party platforms and internally developed initiatives, such as investments in Fluence, Maximo, the AI Fund, Uplight, and 5B.
As of December 31, 2024, AES Clean Energy's renewables project backlog includes 7.3 GW of projects for which long-term PPAs have been signed or, as applicable, contracts have been assigned through a regulatory process. The budget for construction of the projects currently under construction and the contracted projects is over $9 billion.
As of December 31, 2025, AES Clean Energy's renewables project backlog includes 7.6 GW of projects for which long-term PPAs have been signed or, as applicable, contracts have been assigned through a regulatory process. The budget for construction of the projects currently under construction and the contracted projects is over $12 billion.
As a result, we have been consistently rated by Bloomberg New Energy Finance as one of the top two largest sellers globally of renewable power to corporate customers.
As a result of our successful execution of our strategy, we have been consistently rated by Bloomberg New Energy Finance as one of the top two largest sellers globally of renewable power to corporate customers.
Price variations for these fuels can change the composition of generation costs and energy prices in our generation businesses. 34 | 2024 Annual Report Our non-QF generation businesses in the U.S. currently operate as Exempt Wholesale Generators as defined under the Energy Policy Act of 1992, amending the Public Utility Holding Company Act (“PUHCA”).
Price variations for these fuels can change the composition of generation costs and energy prices in our generation businesses. Our non-qualifying facility ("non-QF") generation businesses in the U.S. currently operate as Exempt Wholesale Generators as defined under the Energy Policy Act of 1992, amending the Public Utility Holding Company Act (“PUHCA”).
Tax credits associated with the development of U.S. renewables projects can be substantial and have increased with the adoption of the IRA.
Tax credits associated with the development of U.S. renewables projects can be substantial and have increased with the adoption of the Inflation Reduction Act ("IRA").
Coughlin received a bachelor's degree in commerce and finance from the University of Virginia and a Master of Business Administration degree from the University of California at Berkeley. Bernerd Da Santos , 61 years old, has served as Executive Vice President and President of the Renewables SBU since June 2023. Previously, Mr.
Coughlin received a bachelor's 50 | 2025 Annual Report degree in commerce and finance from the University of Virginia and a Master of Business Administration degree from the University of California at Berkeley. Bernerd Da Santos , 62 years old, has served as Executive Vice President and President of the Renewables SBU since June 2023. Previously, Mr.
On June 16, 2021, the PUCO issued their opinion and order accepting the stipulation as filed. The OCC appealed the final PUCO order with respect to the 2018 and 2019 SEET to the Ohio Supreme Court on December 6, 2021. Oral arguments regarding this appeal have been scheduled for April 2, 2025.
On June 16, 2021, the PUCO issued their opinion and order accepting the stipulation as filed. The OCC appealed the final PUCO order with respect to the 2018 and 2019 SEET to the Ohio Supreme Court on December 6, 2021. Oral arguments regarding this appeal were held on April 2, 2025.
Supreme Court’s stay of its FIP addressing interstate transport for the 2015 ozone national ambient air quality standards. The effective date is November 6, 2024. The Interim Final Rule stays the effectiveness of the Good Neighbor FIP and revises the CSAPR regulations to continue application of the states’ respective trading programs.
Supreme Court’s stay of its FIP addressing interstate transport for the 2015 ozone national ambient air quality standards. The Interim Final Rule stays the effectiveness of the Good Neighbor FIP and revises the CSAPR regulations to continue application of the states’ respective trading programs.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Any loss or corruption of confidential or proprietary data through a breach of our systems or certain of our third party vendor systems may: • impact our operations, revenue, strategic objectives, customer and vendor relationships; • expose us to negative publicity, legal claims, regulatory investigations and proceedings and associated penalties or liabilities; • require extensive repair and restoration costs for additional security measures to avert future attacks; • impair our reputation and limit our competitiveness for future opportunities; and • impact our financial and accounting systems and, subsequently, our ability to correctly record, process and report financial information.
Any loss or corruption of confidential or proprietary data through a breach of our systems or certain of our third-party vendor systems may: • impact our operations, revenue, strategic objectives, or customer and vendor relationships; • expose us to negative publicity, legal claims, regulatory investigations and proceedings and associated penalties or liabilities; • require extensive repair and restoration costs for additional security measures to avert future attacks; • impair our reputation and limit our competitiveness for future opportunities; and • impact our financial and accounting systems and, subsequently, our ability to correctly record, process and report financial information.
We believe that these sources will be adequate to meet our obligations for the foreseeable future, based on a number of material assumptions about access the capital or commercial lending markets, the operating and financial performance of our subsidiaries, exchange rates, our ability to sell assets, and the ability of our subsidiaries to pay dividends and other distributions; however, there can be no assurance that these sources will be available when needed or that our actual cash requirements will not be greater than expected.
We believe that these sources will be adequate to meet our obligations for the foreseeable future, based on a number of material assumptions about access to capital or commercial lending markets, the operating and financial performance of our subsidiaries, exchange rates, our ability to sell assets, and the ability of our subsidiaries to pay dividends and other distributions; however, there can be no assurance that these sources will be available when needed or that our actual cash requirements will not be greater than expected.
Regional or global outbreaks of infectious or contagious diseases, such as occurred during the COVID-19 pandemic, could have material and adverse effects on our results of operations, financial condition and cash flows due to, among other factors: • decline in customer demand as a result of general decline in business activity; • destabilization of the markets and decline in business activity negatively impacting customers’ ability to pay for our services when due or at all, including downstream impacts, whereby the utilities’ customers are unable to pay monthly bills or receiving a moratorium from payment obligations, resulting in inability on the part of utilities to make payments for power supplied by our generation companies; • decline in business activity causing our commercial and industrial customers to experience declining revenues and liquidity difficulties that impede their ability to pay for power that we supply; • government moratoriums or other regulatory or legislative actions that limit changes in pricing, delay or suspend customers’ payment obligations or permit extended payment terms applicable to customers of our utilities or to our offtakers under power purchase agreements, in particular, to the extent that such measures are not mitigated by associated government subsidies or other support to address any shortfall or deficiencies in payments; • claims by our PPA counterparties for delay or relief from payment obligations or other adjustments, including claims based on force majeure or other legal grounds; • decline in spot electricity prices; • the destabilization of the markets and decline in business activity negatively impacting our customer growth in our service territories at our utilities; • negative impacts on the health of our essential personnel and on our operations as a result of implementing stay-at-home, quarantine, curfew and other social distancing measures; • delays or inability to access, transport and deliver fuel to our generation facilities due to restrictions on business operations or other factors affecting us and our third-party suppliers; • delays or inability to access equipment or the availability of personnel to perform planned and unplanned maintenance or disruptions in supply chain, which can, in turn, lead to disruption in operations; • a deterioration in our ability to ensure business continuity, including increased cybersecurity attacks related to a work-from-home environment; • delays to our construction projects, including at our renewables projects, and the timing of the completion of renewables projects; • delay or inability to receive the necessary permits for our development projects due to delays or shutdowns of government operations; • delays in achieving our financial goals, strategy and digital transformation; • deterioration of the credit profile of The AES Corporation and/or its subsidiaries and difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deterioration in credit and financing conditions, which could affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis; • delays or inability to complete asset sales on anticipated terms or to redeploy capital as set forth in our capital allocation plans; • increased volatility in foreign exchange and commodity markets; • deterioration of economic conditions, demand and other related factors resulting in impairments to long-lived assets; and 63 | 2024 Annual Report • delay or inability in obtaining regulatory actions and outcomes that could be material to our business, including for recovery of related losses and the review and approval of our rates at our U.S. regulated utilities.
Regional or global outbreaks of infectious or contagious diseases, such as occurred during the COVID-19 pandemic, could have material and adverse effects on our results of operations, financial condition, and cash flows due to, among other factors: • decline in customer demand as a result of general decline in business activity; • destabilization of the markets and decline in business activity negatively impacting customers’ ability to pay for our services when due or at all, including downstream impacts, whereby the utilities’ customers are unable to pay monthly bills or receiving a moratorium from payment obligations, resulting in inability on the part of utilities to make payments for power supplied by our generation companies; • decline in business activity causing our commercial and industrial customers to experience declining revenues and liquidity difficulties that impede their ability to pay for power that we supply; • government moratoriums or other regulatory or legislative actions that limit changes in pricing, delay or suspend customers’ payment obligations or permit extended payment terms applicable to customers of our utilities or to our offtakers under power purchase agreements, in particular, to the extent that such measures are not mitigated by associated government subsidies or other support to address any shortfall or deficiencies in payments; • claims by our PPA counterparties for delay or relief from payment obligations or other adjustments, including claims based on force majeure or other legal grounds; • decline in spot electricity prices; • the destabilization of the markets and decline in business activity negatively impacting our customer growth in our service territories at our utilities; 59 | 2025 Annual Report • negative impacts on the health of our essential personnel and on our operations as a result of implementing stay-at-home, quarantine, curfew, and other social distancing measures; • delays or inability to access, transport and deliver fuel to our generation facilities due to restrictions on business operations or other factors affecting us and our third-party suppliers; • delays or inability to access equipment or the availability of personnel to perform planned and unplanned maintenance or disruptions in supply chain, which can, in turn, lead to disruption in operations; • a deterioration in our ability to ensure business continuity, including increased cybersecurity attacks related to a work-from-home environment; • delays to our construction projects, including at our renewables projects, and the timing of the completion of renewables projects; • delay or inability to receive the necessary permits for our development projects due to delays or shutdowns of government operations; • delays in achieving our financial goals, strategy, and digital transformation; • deterioration of the credit profile of The AES Corporation and/or its subsidiaries and difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deterioration in credit and financing conditions, which could affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis; • delays or inability to complete asset sales on anticipated terms or to redeploy capital as set forth in our capital allocation plans; • increased volatility in foreign exchange and commodity markets; • deterioration of economic conditions, demand and other related factors resulting in impairments to long-lived assets; and • delay or inability in obtaining regulatory actions and outcomes that could be material to our business, including for recovery of related losses and the review and approval of our rates at our U.S. regulated utilities.
In 2016, the U.S. Supreme Court ruled that such permitting would only be required if such sources also must obtain a new source review permit for increases in other regulated pollutants. For further discussion of the regulation of GHG emissions, see Item 1. — Business—Environmental and Land-Use Regulations—U.S. Environmental and Land-Use Legislation and Regulations—Greenhouse Gas Emissions above.
Supreme Court ruled that such permitting would only be required if such sources also must obtain a new source review permit for increases in other regulated pollutants. For further discussion of the regulation of GHG emissions, see Item 1. — Business—Environmental and Land-Use Regulations—U.S. Environmental and Land-Use Legislation and Regulations—Greenhouse Gas Emissions above.
Volatility in market prices for fuel and electricity may result from, among other things: • plant availability in the markets generally; • availability and effectiveness of transmission facilities owned and operated by third parties; • competition and new entrants; • seasonality, hydrology and other weather conditions; 59 | 2024 Annual Report • illiquid markets; • transmission, transportation constraints, inefficiencies and/or availability; • renewables source contribution to the supply stack; • increased adoption of distributed generation; • energy efficiency and demand side resources; • available supplies of coal, natural gas, and crude oil and refined products; • generating unit performance; • natural disasters, terrorism, wars, embargoes, pandemics and other catastrophic events; • energy, market and environmental regulation, legislation and policies; • general economic conditions that impact demand and energy consumption; and • bidding behavior and market bidding rules.
Volatility in market prices for fuel and electricity may result from, among other things: • plant availability in the markets generally; • availability and effectiveness of transmission facilities owned and operated by third parties; • competition and new entrants; • seasonality, hydrology, and other weather conditions; • illiquid markets; • transmission, transportation constraints, inefficiencies, and/or availability; • renewables source contribution to the supply stack; • increased adoption of distributed generation; • energy efficiency and demand side resources; • available supplies of coal, natural gas, and crude oil and refined products; • generating unit performance; • natural disasters, terrorism, wars, embargoes, pandemics, and other catastrophic events; • energy, market and environmental regulation, legislation, and policies; • general economic conditions that impact demand and energy consumption; and • bidding behavior and market bidding rules.
This level of indebtedness and related security could have other consequences, including: • making it more difficult to satisfy debt service and other obligations; • increasing our vulnerability to general adverse industry and economic conditions, including adverse changes in foreign exchange rates, interest rates and commodity prices; • reducing available cash flow to fund other corporate purposes and grow our business; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry; • placing us at a competitive disadvantage to our competitors that are not as highly leveraged; and 71 | 2024 Annual Report • limiting, along with financial and other restrictive covenants relating to such indebtedness, our ability to borrow additional funds, pay cash dividends or repurchase common stock.
This level of indebtedness and related security could have other consequences, including: • making it more difficult to satisfy debt service and other obligations; • increasing our vulnerability to general adverse industry and economic conditions, including adverse changes in foreign exchange rates, interest rates, and commodity prices; • reducing available cash flow to fund other corporate purposes and grow our business; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry; • placing us at a competitive disadvantage to our competitors that are not as highly leveraged; and • limiting, along with financial and other restrictive covenants relating to such indebtedness, our ability to borrow additional funds, pay cash dividends or repurchase common stock.
Depending on various EGU-specific factors, the bases of emissions guidelines for natural gas-fired units include the use of uniform fuels and routine methods of operation and maintenance and the bases of emissions guidelines for coal-fired units include 40% natural gas co-firing or carbon capture and sequestration with 90% capture of CO2 depending on the date that coal operations cease.
Depending on various EGU-specific factors, the bases of emissions guidelines for natural gas-fired units include the use of uniform fuels and routine methods of operation and maintenance and the bases of emissions guidelines for coal-fired units include 40% natural gas co-firing or carbon capture and sequestration with 90% capture of CO 2 depending on the date that coal operations cease.
Some of our subsidiaries participate in defined benefit pension plans and their net pension plan obligations may require additional significant contributions. We have 27 defined benefit plans, five at U.S. subsidiaries and the remaining plans at foreign subsidiaries, which cover substantially all of the employees at these subsidiaries.
Some of our subsidiaries participate in defined benefit pension plans and their net pension plan obligations may require additional significant contributions. We have 29 defined benefit plans, five at U.S. subsidiaries and the remaining plans at foreign subsidiaries, which cover substantially all of the employees at these subsidiaries.
Additional measures could be considered by RTOs, transmission owners, or governmental authorities to foster or accelerate deployment or utilization of certain high-capacity factor technologies in a manner that negative impacts the development or solar or wind projects.
Additional measures could be considered by RTOs, transmission owners, or governmental authorities to foster or accelerate deployment or utilization of certain high-capacity factor technologies in a manner that negatively impacts the development of solar or wind projects.
In particular, in the U.S., AES’ renewable energy generation growth strategy depends in part on federal, state and local government policies and incentives that support the development, financing, ownership and operation of renewable energy generation projects, including investment tax credits, production tax credits, accelerated depreciation, renewable portfolio standards, feed-in-tariffs and similar programs, REC mechanisms and compliance programs, and tax exemptions.
In particular, in the U.S., AES’ renewable energy generation growth strategy has depended in part on federal, state, and local government policies and incentives that support the development, financing, ownership, and operation of renewable energy generation projects, including investment tax credits, production tax credits, accelerated depreciation, renewable portfolio standards, feed-in-tariffs, and similar programs, REC mechanisms and compliance programs, and tax exemptions.
For example, The AES Corporation's revolving credit facilities and outstanding senior notes include events of default for certain bankruptcy related events 72 | 2024 Annual Report involving material subsidiaries and relating to accelerations of outstanding material debt of material subsidiaries or any subsidiaries that in the aggregate constitute a material subsidiary; or • result in foreclosure on the assets that are pledged under the non-recourse financings, resulting in write-downs of assets and eliminating any and all potential future benefits derived from those assets.
For example, The AES Corporation's revolving credit facilities and outstanding senior notes include events of default for certain bankruptcy related events involving material subsidiaries and relating to accelerations of outstanding material debt of material subsidiaries or any subsidiaries that in the aggregate constitute a material subsidiary; or • result in foreclosure on the assets that are pledged under the non-recourse financings, resulting in write-downs of assets and eliminating any and all potential future benefits derived from those assets.
We may not be able to enter into replacement agreements on terms as favorable as our existing agreements, and may have to sell power at market prices. A counterparty's breach by of a PPA or other agreement could also result in the breach of other agreements, including the affected businesses debt agreements.
We may not be able to enter into replacement agreements on terms as favorable as our existing agreements, and may have to sell power at market prices. A counterparty's breach of a PPA or other agreement could also result in the breach of other agreements, including the affected businesses' debt agreements.
These wind resource estimates are not expected to reflect actual wind energy production in any given year, but long-term averages of a resource. As a result, these types of projects face considerable risk, including that favorable regulatory regimes expire or are adversely modified.
These wind resource estimates are not expected to reflect actual wind energy production in any given year, but long-term averages of a resource. As a result, these types of projects face considerable risk, including that favorable regulatory regimes are further adversely modified.
If we incur significant expenditures in adapting to technological changes, fail to adapt to significant technological changes, fail to obtain access to important new technologies, fail to recover a significant portion of any remaining investment in obsolete assets, or if implemented technology fails to operate as intended, our businesses, operating results and financial condition could be materially adversely affected.
If we incur significant expenditures in adapting to technological changes, fail to adapt to significant technological changes, fail to obtain access to important new technologies, fail to recover a significant portion of any 58 | 2025 Annual Report remaining investment in obsolete assets, or if implemented technology fails to operate as intended, our businesses, operating results and financial condition could be materially adversely affected.
If any of the foregoing risks materialize, costs may increase or revenues may decrease and there could be a material adverse effect on our results of operations, financial condition, cash flows and reputation. 70 | 2024 Annual Report Concerns about data privacy have led to increased regulation and other actions that could impact our businesses.
If any of the foregoing risks materialize, costs may increase or revenues may decrease and there could be a material adverse effect on our results of operations, financial condition, cash flows, and reputation. Concerns about data privacy have led to increased regulation and other actions that could impact our businesses.
While we believe these controls, policies, practices, and 73 | 2024 Annual Report systems are adequate to accurately and fairly reflect the transactions and dispositions of the assets of the Company, the identification of significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner could lead to undetected errors that could result in material misstatements in our financial statements.
While we believe these controls, policies, practices, and systems are adequate to accurately and fairly reflect the transactions and dispositions of the assets of the Company, the identification of significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner could lead to undetected errors that could result in material misstatements in our financial statements.
Further, our operations may experience volatility in revenues and operating margin caused by regulatory and economic difficulties, political instability and currency devaluations, which may increase the uncertainty of cash flows from these businesses. Any of these factors could have a material, adverse effect on our business, results of operations and financial condition.
Further, our operations may experience volatility in revenues and operating margin caused by regulatory and economic difficulties, political instability, and currency devaluations, which may increase the uncertainty of cash flows from these businesses. 55 | 2025 Annual Report Any of these factors could have a material, adverse effect on our business, results of operations and financial condition.
Any impairment of long- 66 | 2024 Annual Report lived assets could have a material adverse effect on our business, financial condition, results of operations, and prospects. Risks associated with Governmental Regulation and Laws Our operations are subject to significant government regulation and could be adversely affected by changes in the law or regulatory schemes.
Any impairment of long-lived assets could have a material adverse effect on our business, financial condition, results of operations, and prospects. Risks associated with Governmental Regulation and Laws Our operations are subject to significant government regulation and could be adversely affected by changes in the law or regulatory schemes.
On May 9, 2024, the EPA published the final NSPS requiring carbon capture and sequestration for new and reconstructed baseload stationary combustion turbines, among other requirements. The EPA did not finalize revisions to the NSPS for newly constructed or reconstructed coal-fired electric utility steam generating units as proposed in 2018.
On May 9, 2024, the EPA published the final NSPS requiring carbon capture and sequestration for new and reconstructed baseload stationary combustion turbines, among other requirements. The EPA did not finalize revisions to the NSPS 65 | 2025 Annual Report for newly constructed or reconstructed coal-fired electric utility steam generating units as proposed in 2018.
If development efforts are not successful, we may abandon certain projects, resulting in, writing off the costs incurred, expensing related capitalized development costs incurred and incurring additional losses associated with any related contingent liabilities. 58 | 2024 Annual Report We do a significant amount of business outside the U.S., including in developing countries.
If development efforts are not successful, we may abandon certain projects, resulting in writing off the costs incurred, expensing related capitalized development costs incurred, and incurring additional losses associated with any related contingent liabilities. We do a significant amount of business outside the U.S., including in developing countries.
As part 65 | 2024 Annual Report of this strategy, we routinely utilize fixed price or indexed forward physical purchase and sales contracts, futures, financial swaps, and option contracts traded in the over-the-counter markets or on exchanges. We also enter into contracts which help us manage our interest rate exposure.
As part of this strategy, we routinely utilize fixed price or indexed forward physical purchase and sales contracts, futures, financial swaps, and option contracts traded in the over-the-counter markets or on exchanges. We also enter into contracts which help us manage our interest rate exposure.
In the case of our U.S. renewables projects involving tax equity investors or purchasers of tax credits, we provide customary Parent Company or subsidiary guarantees to the tax equity investors or tax credit purchasers that require the Parent Company or subsidiary to bear the risk of any IRS recapture or disallowance of certain tax benefits they receive in connection with the transaction.
In the case 68 | 2025 Annual Report of our U.S. renewables projects involving tax equity investors or purchasers of tax credits, we provide customary Parent Company or subsidiary guarantees to the tax equity investors or tax credit purchasers that require the Parent Company or subsidiary to bear the risk of any IRS recapture or disallowance of certain tax benefits they receive in connection with the transaction.
The remaining terms of the power sales contracts of our generation plants range from one to more than 20 years. In many cases, we also limit our exposure to fluctuations in fuel prices by entering into long- 60 | 2024 Annual Report term contracts for fuel with a limited number of suppliers.
The remaining terms of the power sales contracts of our generation plants range from one to more than 20 years. In many cases, we also limit our exposure to fluctuations in fuel prices by entering into long-term contracts for fuel with a limited number of suppliers.
We continue to assess potential threats and vulnerabilities and make investments to address them, including global monitoring of networks and systems, identifying and 62 | 2024 Annual Report implementing new technology, improving user awareness through employee security training, and updating our security policies as well as those for third-party providers.
We continue to assess potential threats and vulnerabilities and make investments to address them, including global monitoring of networks and systems, identifying and implementing new technology, improving user awareness through employee security training, and updating our security policies as well as those for third-party providers.
Once approved, the reliability standards may be enforced by FERC independently, or, alternatively, by the ERO and regional reliability organizations with responsibility for auditing, investigating and otherwise ensuring compliance with reliability standards, subject to FERC oversight. Violations of NERC reliability standards are subject to FERC's penalty authority under the FPA and EPAct 2005.
Once approved, the reliability standards may be enforced by FERC independently, or, alternatively, by the ERO and 64 | 2025 Annual Report regional reliability organizations with responsibility for auditing, investigating and otherwise ensuring compliance with reliability standards, subject to FERC oversight. Violations of NERC reliability standards are subject to FERC's penalty authority under the FPA and EPAct 2005.
Any such developments could impede the realization of our U.S. renewables strategy by resulting in, among other items, lack of a satisfactory market for the development and/or financing of our U.S. renewable energy 57 | 2024 Annual Report projects, abandoning the development of certain U.S. renewable energy projects, a loss of our investments in the projects, and/or reduced project returns.
Any such developments could impede the realization of our U.S. renewables strategy by resulting in, among other items, lack of a satisfactory market for the development and/or financing of our U.S. renewable energy projects, abandoning the development of certain U.S. renewable energy projects, a loss of our investments in the projects, and/or reduced project returns.
If we were to acquire any of these types of businesses, there can be no assurance that we will be successful in transitioning them to private ownership or that we will not incur unforeseen obligations or liabilities. Competition is increasing and could adversely affect us.
If we 57 | 2025 Annual Report were to acquire any of these types of businesses, there can be no assurance that we will be successful in transitioning them to private ownership or that we will not incur unforeseen obligations or liabilities. Competition is increasing and could adversely affect us.
While we may exert influence pursuant to having positions on the boards of such investments and/or through certain limited governance rights, such as rights to veto significant actions, we do not always have this type of influence and the scope and impact of such influence may be limited.
While we may exert influence pursuant to having positions on the boards 61 | 2025 Annual Report of such investments and/or through certain limited governance rights, such as rights to veto significant actions, we do not always have this type of influence, and the scope and impact of such influence may be limited.
At our businesses where cost recovery is available, recovery of costs to restore service and repair damaged facilities is or may be subject to regulatory approval, and any determination by the 64 | 2024 Annual Report regulator not to permit timely and full recovery of the costs incurred.
At our businesses where cost recovery is available, recovery of costs to restore service and repair damaged facilities is or may be subject to regulatory approval, and any determination by the regulator not to permit timely and full recovery of the costs incurred.
Pension costs are based upon a number of actuarial assumptions, including an expected long-term rate of return on pension plan assets, the expected life span of pension plan beneficiaries and the discount rate used to determine the present value of future pension obligations.
Pension costs are based upon a number of actuarial assumptions, including an expected long-term rate of return on pension plan assets, the expected life span 62 | 2025 Annual Report of pension plan beneficiaries and the discount rate used to determine the present value of future pension obligations.
Certain of our subsidiaries are in default with respect to all or a portion of their outstanding indebtedness. The total debt classified as current in our Consolidated Balance Sheets related to such defaults was $540 million as of December 31, 2024.
Certain of our subsidiaries are in default with respect to all or a portion of their outstanding indebtedness. The total debt classified as current in our Consolidated Balance Sheets related to such defaults was $20 million as of December 31, 2025.
Changes in temperature, precipitation and snow pack conditions also could affect the amount and timing of hydroelectric generation. To the extent that hydrological conditions result in droughts or other conditions negatively affect our hydroelectric generation business, such as has happened in Panama in 2019, Brazil in 2021 and Colombia in 2024, our results of operations can be materially adversely affected.
Changes in temperature, precipitation and snowpack conditions also could affect the amount and timing of hydroelectric generation. To the extent that hydrological conditions result in droughts or other conditions negatively affect our hydroelectric generation business, such as has happened in Panama in 2019 and Colombia in 2024, our results of operations can be materially adversely affected.
There can be no assurance that the outcomes of such matters will not have a material adverse effect on our consolidated financial position. Our renewable energy projects and other initiatives face considerable uncertainties. Wind, solar, hydrogen, and energy storage projects are subject to substantial risks.
There can be no assurance that the outcomes of such matters will not have a material adverse effect on our consolidated financial position. 53 | 2025 Annual Report Our renewable energy projects and other initiatives face considerable uncertainties. Wind, solar, and energy storage projects are subject to substantial risks.
If any of the following events actually occur, our business, financial results and financial condition could be materially adversely affected . Risks Associated with our Operations The operation of power generation, distribution and transmission facilities involves significant risks.
If any of the following events actually occur, our business, financial results and financial condition could be materially adversely affected . 52 | 2025 Annual Report Risks Associated with our Operations The operation of power generation, distribution and transmission facilities involves significant risks.
The EPA has brought suit against and obtained settlements with many companies for allegedly making major 68 | 2024 Annual Report modifications to coal-fired generating units without proper permit approvals and without installing best available control technology.
The EPA has brought suit against and obtained settlements with many companies for allegedly making major modifications to coal-fired generating units without proper permit approvals and without installing best available control technology.
We are in the business of generating and distributing electricity, which involves certain risks that can adversely affect financial and operating performance, including: • changes in the availability of our generation facilities or distribution systems due to increases in scheduled and unscheduled plant outages, equipment failure, failure of transmission systems, labor disputes, disruptions in fuel supply, poor hydrologic and wind conditions, inability to comply with regulatory or permit requirements, or catastrophic events such as fires, floods, storms, hurricanes, earthquakes, dam failures, tsunamis, explosions, terrorist acts, vandalism, cyber-attacks or other similar occurrences; and • changes in our operating cost structure, including, but not limited to, increases in costs relating to gas, coal, oil and other fuel; fuel transportation; purchased electricity; operations, maintenance and repair; environmental compliance, including the cost of purchasing emissions offsets and capital expenditures to install environmental emission equipment; transmission access; and insurance. 56 | 2024 Annual Report Our businesses require reliable transportation sources (including related infrastructure such as roads, ports and rail), power sources and water sources to access and conduct operations.
We are in the business of generating and distributing electricity, which involves certain risks that can adversely affect financial and operating performance, including: • changes in the availability of our generation facilities or distribution systems due to increases in scheduled and unscheduled plant outages, equipment failure, failure of transmission systems, labor disputes, disruptions in fuel supply, poor hydrologic and wind conditions, inability to comply with regulatory or permit requirements, or catastrophic events such as fires, floods, storms, hurricanes, earthquakes, dam failures, tsunamis, explosions, terrorist acts, vandalism, cyber-attacks or other similar occurrences; and • changes in our operating cost structure, including, but not limited to, increases in costs relating to gas, coal, oil, and other fuel; fuel transportation; purchased electricity; operations, maintenance, and repair; environmental compliance, including the cost of purchasing emissions offsets and capital expenditures to install environmental emission equipment; transmission access; and insurance.
The impact to the Company remains unknown but may be material. Risks Related to our Indebtedness and Financial Condition We have a significant amount of debt. As of December 31, 2024, we had approximately $29 billion of outstanding indebtedness on a consolidated basis. All outstanding borrowings under The AES Corporation's revolving credit facilities are unsecured.
The impact to the Company remains unknown but may be material. 67 | 2025 Annual Report Risks Related to our Indebtedness and Financial Condition We have a significant amount of debt. As of December 31, 2025, we had approximately $30 billion of outstanding indebtedness on a consolidated basis. All outstanding borrowings under The AES Corporation's revolving credit facilities are unsecured.
In 2024, the Company's subsidiaries operated businesses that had total direct CO 2 emissions of approximately 28 million metric tonnes, approximately 10 million of which were emitted by our U.S. businesses (both figures are ownership adjusted). The Company uses CO 2 emission estimation methodologies supported by "The Greenhouse Gas Protocol" reporting standard on GHG emissions.
In 2025, the Company's subsidiaries operated businesses that had total direct CO 2 equivalent emissions of approximately 29 million metric tonnes, approximately 11 million of which were emitted by our U.S. businesses (both figures are ownership adjusted). The Company uses CO 2 emission estimation methodologies supported by "The Greenhouse Gas Protocol" reporting standard on GHG emissions.
Our infrastructure may be targeted by nation states, hacktivists, criminals, insiders or terrorist groups. In particular, there has been an increased focus on the U.S. energy grid believed to be related to the Russia/Ukraine conflict.
Our infrastructure may be targeted by nation states, hacktivists, criminals, insiders or terrorist groups. In particular, there has been an increased focus on the U.S. energy grid believed to be related to various geopolitical conflicts.
If these policies and incentives are changed or eliminated, or AES is unable to use them, there could be a material adverse impact on AES’ U.S. renewable growth opportunities, including fewer future PPAs or lower prices in future PPAs, decreased revenues, reduced economic returns on certain project company investments, increased financing costs, and/or difficulty obtaining financing.
If these policies and incentives are further changed or eliminated, if pending tax guidance related to these policies is adverse, or AES is otherwise unable to use these policies or incentives, there could be a material adverse impact on AES’ U.S. renewable growth opportunities, including fewer future PPAs, decreased revenues, reduced economic returns on certain project company investments, increased financing costs, and/or difficulty obtaining financing.
Among other steps, FERC has encouraged RTOs and ISOs to develop demand response bidding programs as a mechanism for responding to peak electric demand and has also encouraged the integration of distributed energy resources. These programs may reduce the value of generation assets, particularly utility-scale projects.
Increased market participation may have the effect of lowering our operating margins. Among other steps, FERC has encouraged RTOs and ISOs to develop demand response bidding programs as a mechanism for responding to peak electric demand and has also encouraged the integration of distributed energy resources. These programs may reduce the value of generation assets, particularly utility-scale projects.
Additionally, our contracts in certain markets where hydroelectric facilities are prevalent may require us to purchase power in the spot markets when our facilities are unable to operate at anticipated levels and the price of such spot power may increase substantially in times of low hydrology. Severe weather and natural disasters may present significant risks to our business.
Additionally, our contracts in certain markets where hydroelectric facilities are prevalent may require us to purchase power in the spot markets when our facilities are unable to operate at anticipated levels and the price of such spot power may increase substantially in times of low hydrology.
If these suppliers cannot perform, we would seek to meet our fuel requirements by purchasing fuel at market prices, exposing us to market price volatility and the risk that fuel and transportation may not be available during certain periods at any price, which could adversely impact the profitability of the affected business and our results of operations, and could result in a breach of agreements with other counterparties, including, without limitation, offtakers or lenders. 61 | 2024 Annual Report The financial performance of our facilities is dependent on the credit quality of, and continued performance by, suppliers and customers.
If these suppliers cannot perform, we would seek to meet our fuel requirements by purchasing fuel at market prices, exposing us to market price volatility and the risk that fuel and transportation may not be available during certain periods at any price, which could adversely impact the profitability of the affected business and our results of operations, and could result in a breach of agreements with other counterparties, including, without limitation, offtakers or lenders.
In addition to government regulators, many groups, including politicians, environmentalists, the investor community and other private parties have expressed increasing concern about GHG emissions. New regulation, such as the initiatives in Chile and the Puerto Rico Energy Public Policy Act, may adversely affect our operations. See Item 7. — Management's Discussion and Analysis—Key Trends and Uncertainties—Decarbonization Initiatives .
In addition to government regulators, many groups, including politicians, environmentalists, the investor community, and other private parties have expressed increasing concern about GHG emissions. Regulation, such as the initiatives in Chile and the Puerto Rico Energy Public Policy Act, may adversely affect our operations.
We may not be able to enter into long-term contracts that reduce volatility in our results. Many of our generation plants conduct business under long-term sales and supply contracts, which helps these businesses to manage risks by reducing the volatility associated with power and input costs and providing a stable revenue and cost structure.
Many of our generation plants conduct business under long-term sales and supply contracts, which helps these businesses to manage risks by reducing the volatility associated with power and input costs and providing a stable revenue and cost structure.
Some RTOs, such as PJM, have recently implemented or are considering accelerated or supplemental interconnection processes for high-capacity factor resources, which could result in delays or cost increases to existing or future interconnection requests of intermittent renewable energy projects, such as solar and wind.
Some RTOs, such as PJM, have recently implemented or are considering accelerated or supplemental interconnection processes for high-capacity factor resources or for resources that service a resource adequacy need or new load, 54 | 2025 Annual Report which could result in delays or cost increases to existing or future interconnection requests of intermittent renewable energy projects, such as solar and wind.
Accordingly, we may be required to provide some other form of assurance, such as a letter of credit and/or collateral, to backstop or replace any credit support by The AES Corporation, which reduces our available credit. There can be no assurance that counterparties will accept such guarantees or other assurances.
Furthermore, counterparties may no longer be willing to accept general unsecured commitments by The AES Corporation to provide credit support. Accordingly, we may be required to provide some other form of assurance, such as a letter of credit and/or collateral, to backstop or replace any credit support by The AES Corporation, which reduces our available credit.
Specific standards for performance for EGUs will be established through a State Plan (or a Federal Plan if the state of Indiana were to not submit an approvable plan). The May 2024 rule is subject to legal challenges. On October 16, 2024, the U.S. Supreme Court denied emergency stay applications.
Specific standards for performance for EGUs will be established through a State Plan (or a Federal Plan if the state of Indiana were to not submit an approvable plan). The May 2024 rule is subject to legal challenges.
The impacts described above could also result from our efforts to comply with European Market Infrastructure Regulation, which includes regulations related to the trading, reporting and clearing of derivatives and similar regulations may be passed in other jurisdictions where we conduct business. Any of the above events may result in lower operating margins and financial results for the affected businesses.
The impacts described above could also result from our efforts to comply with European Market Infrastructure Regulation, which includes regulations 63 | 2025 Annual Report related to the trading, reporting, and clearing of derivatives and similar regulations may be passed in other jurisdictions where we conduct business.
In addition, a portion of our generation facilities were constructed many years ago and may require significant capital expenditures for maintenance. The equipment at our plants requires periodic upgrading, improvement or repair and replacement equipment or parts may be difficult to obtain in circumstances where we rely on a single supplier or a small number of suppliers.
The equipment at our plants requires periodic upgrading, improvement or repair and replacement equipment or parts may be difficult to obtain in circumstances where we rely on a single supplier or a small number of suppliers.
The Parties to the United Nations Framework Convention on Climate Change's Paris Agreement established a long-term goal of keeping the increase in global average temperature well below 2°C above pre-industrial levels. We anticipate that the Paris Agreement will continue the trend toward efforts to decarbonize the global economy and to further limit GHG emissions.
The Parties to the United Nations Framework Convention on Climate Change's Paris Agreement established a long-term goal of keeping the increase in global average temperature well below 2°C above pre-industrial levels.
As of December 31, 2024, we had approximately $29 billion of outstanding indebtedness on a consolidated basis, of which approximately $5.7 billion was recourse debt of the Parent Company and approximately $22.7 billion was non-recourse debt.
As of December 31, 2025, we had approximately $30 billion of outstanding indebtedness on a consolidated basis, of which approximately $6.0 billion was recourse debt of the Parent Company and approximately $23.2 billion was non-recourse debt.
Failure to maintain an effective system of internal control over financial reporting could result in material misstatements in our financial statements or may negatively impact investor confidence in our reported financial information.
There can be no assurance that counterparties will accept such guarantees or other assurances. Failure to maintain an effective system of internal control over financial reporting could result in material misstatements in our financial statements or may negatively impact investor confidence in our reported financial information.
As of December 31, 2024, Fluence continues to report that a material weakness in its internal control over revenue recognition has not yet been remediated. Such material weakness can impact the reliability of the Fluence financial information that we may include as part of our financial information.
In recent years, Fluence has reported a material weakness in its internal control over revenue recognition that was remediated as of December 31, 2024. If there is a material weakness in the future, that can impact the reliability of the Fluence financial information that we may include as part of our financial information.
Several of our businesses are subject to potentially significant remediation expenses, enforcement initiatives, private party lawsuits and reputational risk associated with CCR.
Any of the above events may result in lower operating margins and financial results for the affected businesses. Several of our businesses are subject to potentially significant remediation expenses, enforcement initiatives, private party lawsuits, and reputational risk associated with CCR.
Volatility in wholesale prices could have a material adverse impact on the financial performance of our existing generation assets to the extent they currently sell or buy power into the spot market to serve our contracts or will seek to sell power into the spot market once our contracts expire.
Volatility in wholesale prices could have a material adverse impact on the financial performance of our existing generation assets to the extent they currently sell or buy power into the spot market to serve our contracts or will seek to sell power into the spot market once our contracts expire. 56 | 2025 Annual Report Further, the Chinese market has driven global materials demand and pricing for commodities, many of which are produced in our key electricity markets in South America.
Further, we may be unable to dispose of coal-fired generation assets at anticipated prices, the estimated useful lives of these assets may decrease, and the value of such assets may be impaired. These initiatives could also result in the early retirement of coal-fired generation facilities, which could result in stranded costs if regulators disallow full recovery of investments.
Further, we may be unable to dispose of coal-fired generation assets at anticipated prices, the estimated useful lives of these assets may decrease, and the value of such assets may be impaired.
Weather conditions directly influence the demand for electricity and natural gas and other fuels and affect the price of energy and energy-related commodities.
Severe weather and natural disasters may present significant risks to our business. 60 | 2025 Annual Report Weather conditions directly influence the demand for electricity and natural gas and other fuels and affect the price of energy and energy-related commodities.
The availability and cost of this infrastructure affects capital and operating costs and levels of production and sales. Limitations or interruptions in this infrastructure or at the facilities of our subsidiaries, including as a result of third parties intentionally or unintentionally disrupting this infrastructure or the facilities of our subsidiaries, could impede their ability to produce electricity.
Limitations or interruptions in this infrastructure or at the facilities of our subsidiaries, including as a result of third parties intentionally or unintentionally disrupting this infrastructure or the facilities of our subsidiaries, could impede their ability to produce electricity. In addition, a portion of our generation facilities were constructed many years ago and may require significant capital expenditures for maintenance.
We maintain an amount of insurance protection that we believe is customary, but there can be no assurance it will be sufficient or effective in light of all circumstances, hazards or liabilities to which we may be subject. Our insurance does not cover every potential risk associated with our operations. Adequate coverage at reasonable rates is not always obtainable.
Furthermore, through AGIC, AES’ captive insurance company, we take certain insurance risk on our businesses. We maintain an amount of insurance protection that we believe is customary, but there can be no assurance it will be sufficient or effective in light of all circumstances, hazards, or liabilities to which we may be subject.
A downgrade in the credit ratings of The AES Corporation or its subsidiaries could adversely affect our access to the capital markets, interest expense, liquidity or cash flow.
A downgrade in the credit ratings of The AES Corporation or its subsidiaries could adversely affect our access to the capital markets, interest expense, liquidity, or cash flow. 69 | 2025 Annual Report If any of the credit ratings of The AES Corporation and its subsidiaries were to be downgraded, our ability to raise capital on favorable terms could be impaired and our borrowing costs could increase.
Public Utility Holding Company Act of 1935, while continuing to provide FERC and state utility commissions with enhanced access to the books and records of certain utility holding companies. PUHCA 2005 also creates additional potential challenges and opportunities. By removing some barriers to mergers and other potential combinations, the creation of large, geographically dispersed utility holding companies is more likely.
PUHCA 2005 eliminated many of the restrictions that had been in place under the U.S. Public Utility Holding Company Act of 1935, while continuing to provide FERC and state utility commissions with enhanced access to the books and records of certain utility holding companies. PUHCA 2005 also creates additional potential challenges and opportunities.
The impact of the results of further proceedings and potential future greenhouse gas emissions regulations remains uncertain, but it could be material. 69 | 2024 Annual Report In 2010, the EPA adopted regulations pertaining to GHG emissions that require new and existing sources of GHG emissions to potentially obtain new source review permits from the EPA prior to construction or modification.
In 2010, the EPA adopted regulations pertaining to GHG emissions that require new and existing sources of GHG emissions to potentially obtain new source review permits from the EPA prior to construction or modification. In 2016, the U.S.
Power generation, distribution and transmission involves hazardous activities. We may become exposed to significant liabilities for which we may not have adequate risk mitigation and/or insurance coverage. Furthermore, through AGIC, AES’ captive insurance company, we take certain insurance risk on our businesses.
Volatility in economic growth in China could result in lower economic growth and lower demand for electricity in our key markets. We may not have adequate risk mitigation or insurance coverage for liabilities. Power generation, distribution and transmission involves hazardous activities. We may become exposed to significant liabilities for which we may not have adequate risk mitigation and/or insurance coverage.
These entities may have enhanced financial strength and therefore an increased ability to compete with us in the U.S. FERC strongly encourages competition in wholesale electric markets. Increased market participation may have the effect of lowering our operating margins.
By removing some barriers to mergers and other potential combinations, the creation of large, geographically dispersed utility holding companies is more likely. These entities may have enhanced financial strength and therefore an increased ability to compete with us in the U.S. FERC strongly encourages competition in wholesale electric markets.
In addition, new tariffs, duties or other assessments could be imposed on the imports of solar cells, modules, batteries or other equipment utilized in our renewable energy projects.
Further, the adoption of the 2025 Act requires the issuance of tax guidance, some of which has not yet been issued, that may further impact our projects. In addition, new tariffs, duties, or other assessments have been imposed on the imports of solar cells, modules, batteries, or other equipment utilized in our renewable energy projects.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects. 67 | 2024 Annual Report Some of our U.S. businesses are subject to the provisions of various laws and regulations administered by FERC, NERC and by state utility commissions that can have a material effect on our operations.
Some of our U.S. businesses are subject to the provisions of various laws and regulations administered by FERC, NERC and by state utility commissions that can have a material effect on our operations. The AES Corporation is a registered electric utility holding company under the PUHCA 2005 as enacted as part of the EPAct 2005.
The direct and indirect effects of such media attention, and the demands of responding to and addressing it, may divert management time and attention.
The direct and indirect effects of such media attention, and the demands of responding to and addressing it, may divert management time and attention. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, reputation, and prospects.
In addition, insurance may not fully cover the liability or the consequences of any business interruptions such as natural catastrophes, equipment failure or labor dispute. The occurrence of a significant adverse event not adequately covered by insurance could have a material adverse effect on our business, results or operations, financial condition, and prospects.
The occurrence of a significant adverse event not adequately covered by insurance could have a material adverse effect on our business, results or operations, financial condition, and prospects. We may not be able to enter into long-term contracts that reduce volatility in our results.
In particular, the availability of insurance for coal-fired generation assets has decreased as certain insurers have opted to discontinue or limit offering insurance for such assets. Certain insurers have also withdrawn from insuring hydroelectric assets. We cannot provide assurance that insurance coverage will continue to be available in the amounts or on terms similar to our current policies.
Our insurance does not cover every potential risk associated with our operations. Adequate coverage at reasonable rates is not always obtainable. In particular, the availability of insurance for coal-fired generation assets has decreased as certain insurers have opted to discontinue or limit offering insurance for such assets. Certain insurers have also withdrawn from insuring hydroelectric assets.
The Netherlands, Bulgaria, and Vietnam adopted legislation to implement Pillar 2 effective as of January 1, 2024. The impact to the Company during 2024 was not material. We will continue to monitor the issuance of draft legislation in other non-EU countries where the Company operates that are considering Pillar 2 amendments.
The side-by-side package is intended to take effect as of January 1, 2026, but is subject to enactment of legislation in the local jurisdictions. We will continue to monitor the issuance of legislation in other non-EU countries where the Company operates that are considering Pillar 2 amendments.
In the fourth quarter of 2022, the European Commission adopted an amended Directive on Pillar 2 establishing a global minimum tax at a 15% rate. The adoption requires EU Member States to transpose the Directive into their respective national laws by December 31, 2023 for the rules to come into effect as of January 1, 2024.
The adoption required EU Member States to transpose the Directive into their respective national laws by December 31, 2023 for the rules to have come into effect as of January 1, 2024. The Netherlands, Bulgaria, and Vietnam adopted legislation to implement Pillar 2 effective as of January 1, 2024. The impact to the Company during 2025 was not material.
Removed
Some of these business lines are dependent upon favorable regulatory incentives to support continued investment, and there is significant uncertainty about the extent to which such favorable regulatory incentives, in particular, those associated with the U.S. Inflation Reduction Act of 2022, will be available in the future.
Added
Our businesses require reliable transportation sources (including related infrastructure such as roads, ports, and rail), power sources and water sources to access and conduct operations. The availability and cost of this infrastructure affects capital and operating costs and levels of production and sales.
Removed
Further, the Chinese market has driven global materials demand and pricing for commodities, many of which are produced in our key electricity markets in South America. Volatility in economic growth in China could result in lower economic growth and lower demand for electricity in our key markets. We may not have adequate risk mitigation or insurance coverage for liabilities.
Added
More recently, the favorable regulatory regimes associated with the U.S. Inflation Reduction Act of 2022 have been curtailed by the passage of H.R. 1 (the "2025 Act"). See Item 7.— Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties—Macroeconomic and Political— U.S. Tax Law Reform and U.S. Renewable Energy Tax Credits .
Removed
The AES Corporation is a registered electric utility holding company under the PUHCA 2005 as enacted as part of the EPAct 2005. PUHCA 2005 eliminated many of the restrictions that had been in place under the U.S.
Added
We cannot provide assurance that insurance coverage will continue to be available in the amounts or on terms similar to our current policies. In addition, insurance may not fully cover the liability or the consequences of any business interruptions such as natural catastrophes, equipment failure, or labor dispute.
Removed
This estimate is based on a number of projections and assumptions that may prove to be incorrect, such as the forecasted dispatch, anticipated plant efficiency, fuel type, CO 2 emissions rates and our subsidiaries' achieving completion of such construction and development projects.
Added
The financial performance of our facilities is dependent on the credit quality of, and continued performance by, suppliers and customers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The CISO is responsible for assessing and managing our cyber risk management program. In this role, the CISO informs senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts. Our CISO has extensive experience assessing and managing cybersecurity programs and cybersecurity risk. Our CISO has served in that position since 2024.
In this role, the CISO informs senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts. Our CISO has extensive experience assessing and managing cybersecurity programs and cybersecurity risk and has served in that position since 2024.
ITEM 1C. CYBERSECURITY We recognize the importance of maintaining the safety and security of our people, systems, and data and have a holistic process, supported by our management and Board of Directors, for overseeing and managing cybersecurity and related risks. AES’ Chief Information Security Officer (“CISO”) reports to our General Counsel and is the head of the Company’s cybersecurity team.
ITEM 1C. CYBERSECURITY We recognize the importance of maintaining the safety and security of our people, systems, and data and have a holistic process, supported by our management and Board of Directors, for overseeing and managing cybersecurity and related risks.
We consider cybersecurity as part of the enterprise risk process, including organized and structured reporting protocols. The prioritization of cybersecurity risk is aligned with overall risk management processes. In addition, the Company’s management team considers risks relating to cybersecurity, among other significant risks, and applicable mitigation plans to address such risks, at monthly performance review meetings.
The prioritization of cybersecurity risk is aligned with overall risk management processes. 70 | 2025 Annual Report In addition, the Company’s management team considers risks relating to cybersecurity, among other significant risks, and applicable mitigation plans to address such risks, at monthly performance review meetings.
The Global Leadership Team, as well as the Vice President Global Financial Planning and Analytics, Treasurer, and Vice President Internal Audit, among others, participate in such meetings. 74 | 2024 Annual Report We have also established an Incident Response Team and associated protocol led by our CISO that governs our assessment, response, and notifications internally and externally upon the occurrence of a cybersecurity incident.
We have also established an Incident Response Team and associated protocol led by our CISO that governs our assessment, response, and notifications internally and externally upon the occurrence of a cybersecurity incident.
Added
AES’ Vice President Cybersecurity acts as the Chief Information Security Officer (“CISO”), reports to our Chief Digital Officer, and is the head of the Company’s cybersecurity team. The CISO is responsible for assessing and managing our cyber risk management program.
Added
We consider cybersecurity as part of the enterprise risk process, including organized and structured reporting protocols.
Added
The Global Leadership Team, as well as the Vice President Global Financial Planning and Analytics, Vice President Global Treasurer, and Vice President Internal Audit, among others, participate in such meetings.

Item 2. Properties

Properties — owned and leased real estate

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However, in a few instances, no accompanying project financing exists for the facility, and in a few of these cases, the land interest may not be subject to any encumbrance and is owned outright by the subsidiary or affiliate. 75 | 2024 Annual Report
However, in a few instances, no accompanying project financing exists for the facility, and in a few of these cases, the land interest may not be subject to any encumbrance and is owned outright by the subsidiary or affiliate. 71 | 2025 Annual Report

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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In February 2024, at the request of the Company, the Dominican Supreme Court of Justice transferred the case to a different civil court, namely, the Civil Court of La Vega. The claimants' attempt to recuse the presiding judge has been rejected by the relevant Dominican appellate court.
In February 2024, at the request of the Company, the Dominican Supreme Court of Justice transferred the case to a different civil court, namely, the Civil Court of La Vega (“CFI”). The claimants’ attempt to recuse the presiding judge has been rejected by the relevant Dominican appellate court.
On January 6, 2022, AES Andes filed a reposition with the SMA seeking modification of the means for compliance with the ex officio action. On January 17, 2023, the SMA approved street paving measures, or alternatively a program providing heaters for community members, as the means to satisfy the air emissions offsets in the approved Compliance Plan.
On January 6, 2022, AES Andes filed a request with the SMA seeking modification of the means for compliance with the ex officio action. On January 17, 2023, the SMA approved street paving measures, or alternatively a program providing heaters for community members, as the means to satisfy the air emissions offsets in the approved Compliance Plan.
Pursuant to SEC amendments Item 103 of SEC Regulation S-K, AES’ policy is to disclose environmental legal proceedings to which a governmental authority is a party if such proceedings are reasonably expected to result in monetary sanctions of greater than or equal to $1 million.
Pursuant to SEC amendments Item 103 of SEC Regulation S-K, AES’ policy is to disclose environmental legal proceedings to which a government authority is a party if such proceedings are reasonably expected to result in monetary sanctions of greater than or equal to $1 million.
However, an ex officio action was brought by the SMA due to alleged exceedances of generation limits, which would require the Company to reduce SO 2 , NO X and PM emissions in order to achieve the emissions offset established in the Compliance Program.
Separately, an ex officio action was brought by the SMA due to alleged exceedances of generation limits, which would require the Company to reduce SO 2 , NO X and PM emissions in order to achieve the emissions offset established in the Compliance Program.
It is reasonably possible, however, that some matters could be decided unfavorably to the Company and could require the Company to pay damages or make expenditures in amounts that could be material, but cannot be estimated as of December 31, 2024.
It is reasonably possible, however, that some matters could be decided unfavorably to the Company and could require the Company to pay damages or make expenditures in amounts that could be material, but cannot be estimated as of December 31, 2025.
On May 26, 2020, CCC staff sent AES an NOV directing AES to discontinue any operation of the water pumps in the alleged 76 | 2024 Annual Report wetlands and to submit a Coastal Development Permit (“CDP”) application for the removal of the water pumps within the alleged wetlands.
On May 26, 2020, CCC staff sent AES an NOV directing AES to discontinue any operation of the water pumps in the alleged 72 | 2025 Annual Report wetlands and to submit a Coastal Development Permit (“CDP”) application for the removal of the water pumps within the alleged wetlands.
AES Andes has submitted a proposed “Compliance Program” to the SMA for the Ventanas Complex. 77 | 2024 Annual Report The latest version of this Compliance Program was submitted on May 26, 2021. On December 30, 2021, the Compliance Program was approved by the SMA.
AES Andes has submitted a proposed “Compliance Program” to the SMA for the Ventanas Complex. 73 | 2025 Annual Report The latest version of this Compliance Program was submitted on May 26, 2021. On December 30, 2021, the Compliance Program was approved by the SMA.
The case is now awaiting judgment. The removal and remediation costs are estimated to be approximately R$15 million to R$60 million ($2 million to $10 million), and there could be additional costs which cannot be estimated at this time.
The case is now awaiting judgment. The removal and remediation costs are estimated to be approximately R$15 million to R$60 million ($3 million to $11 million), and there could be additional costs which cannot be estimated at this time.
Preliminary hearings have taken place. The relevant AES companies believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
The AES companies believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
On October 14, 2020, the City deemed the CDP application to be complete and indicated a public hearing will be required. AES submitted all required information and waited for the City to continue processing the application. In December 2023, the City indicated it would continue processing the CDP application.
On October 14, 2020, the City deemed the CDP application to be complete and indicated a public hearing will be required. AES submitted all required information and waited for the City to continue processing the application.
The claimants are attempting to formally serve the appeal on all defendants. The AES Defendants believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
The AES Defendants believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this lawsuit; however, there can be no assurances that they will be successful in their efforts.
The lawsuit does not identify or provide any supporting information concerning the alleged injuries of the claimants individually. Nor does the lawsuit provide any information supporting the demand for damages or explaining how the quantum was derived.
The lawsuit generally alleges that the CCRs caused personal injuries and deaths and demands over $600 million in alleged damages. The lawsuit does not identify or provide any supporting information concerning the alleged injuries of the claimants individually. Nor does the lawsuit provide any information supporting the demand for damages or explaining how the quantum was derived.
On February 16, 2023, the Alto Maipo project submitted an initial compliance program to the SMA, which has undergone observations by the SMA and interested third parties, and been resubmitted by the project. On December 9, 2024, the SMA rejected the latest version of the Compliance Program. On December 16, Alto Maipo submitted a petition for reconsideration.
On February 16, 2023, the Alto Maipo project submitted an initial compliance program to the SMA. On December 9, 2024, the SMA rejected an updated version of the compliance program. On December 16, 2024, Alto Maipo submitted a petition for reconsideration of the rejection, which SMA denied on October 13, 2025.
The lawsuit purports to be brought on behalf of over 425 Dominican claimants, living and deceased, and appears to seek relief relating to CCRs that were delivered to the Dominican Republic in 2003 and 2004. The lawsuit generally alleges that the CCRs caused personal injuries and deaths and demands over $600 million in alleged damages.
In February 2022, a lawsuit was filed in Dominican Republic civil court against the Company. The lawsuit purports to be brought on behalf of over 425 Dominican claimants, living and deceased, and appears to seek relief relating to CCRs that were delivered to the Dominican Republic in 2003 and 2004.
The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts. In February 2022, a lawsuit was filed in Dominican Republic civil court against the Company.
The appeal has been duly admitted and the Federal District Court’s decision on the injunction request is pending. The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
On June 3, 2024, the Company appealed this fine to the Environmental Court. The Company believes that it has meritorious defenses and will continue to assert them vigorously in this dispute; however, there can be no assurances that it will be successful. In March 2020, Mexico’s Comisión Federal de Electricidad (“CFE”) served an arbitration demand upon AES Mérida III.
On June 3, 2024, the Company appealed this fine to the Environmental Court. The appellate hearing occurred on April 3, 2025; the Environmental Court’s decision on the appeal is pending. The Company believes that it has meritorious defenses and will continue to assert them vigorously in this dispute; however, there can be no assurances that it will be successful.
AES will vigorously defend its interests with regard to the NOV, but we cannot predict the outcome of the matter at this time. However, settlements and litigated outcomes of Coastal Act and LCP claims alleged against other companies have required them to pay significant civil penalties and undertake remedial measures.
However, settlements and litigated outcomes of Coastal Act and LCP claims alleged against other companies have required them to pay significant civil penalties and undertake remedial measures. On March 23, 2021, the U.S.
The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in this proceeding; however, there can be no assurances that it will be successful in its efforts. 78 | 2024 Annual Report On January 26, 2023, the SMA notified Alto Maipo SpA of four alleged charges relating to the Alto Maipo facility, all of which are categorized by the SMA as “serious.” The alleged charges include untimely completion of intake works and insufficient capture by the provisional works, irrigation water outlet and canal contemplated by an agreement with local communities; non-compliance with the details of the forest management plans and intervention in unauthorized areas; construction of a road in a restricted paleontological area; and unlawful moving of fauna.
On January 26, 2023, the SMA notified Alto Maipo SpA of four alleged charges relating to the Alto Maipo facility, all of which are categorized by the SMA as “serious.” The alleged charges include: untimely completion of certain intake works; insufficient capture species; non-compliance with certain forest management plan goals; and intervention of a restricted paleontological area.
On January 20, 2023, TEP was notified of the resolution issued by the Authority, which alleges breaches of air emission regulations, including the failure to submit reports. The resolution imposes a fine of $27,615,140 pesos (approximately $1.3 million).
On May 12, 2021, the Mexican Federal Attorney for Environmental Protection (the “Agency”) initiated an environmental audit at the Termoeléctrica del Peñoles thermal generation facility (“TEP”). On January 20, 2023, TEP was notified of the resolution issued by the Agency, which alleges breaches of air emission regulations, including the failure to submit reports.
Removed
In October 2015, AES Indiana received an NOV alleging violations of the Clean Air Act (“CAA”), the Indiana State Implementation Plan (“SIP”), and the Title V operating permit related to alleged particulate and opacity violations at Petersburg Station Unit 3.
Added
In December 2023, the City indicated it would continue processing the CDP application; AES has since followed up with the City and awaits the next phase of the permitting process. AES will vigorously defend its interests with regard to the NOV, but we cannot predict the outcome of the matter at this time.
Removed
In addition, in February 2016, AES Indiana received an NOV from the EPA alleging violations of New Source Review and other CAA regulations, the Indiana SIP, and the Title V operating permit at Petersburg Station.
Added
District Court for the Southern District of Indiana approved and entered a judicial consent decree among AES Indiana, the United States on behalf of the Environmental Protection Agency ("EPA"), and the Indiana Department of Environmental Management (“IDEM”).
Removed
On August 31, 2020, AES Indiana reached a settlement with the EPA, the DOJ and the Indiana Department of Environmental Management (“IDEM”), resolving these purported violations of the CAA at Petersburg Station. The settlement agreement, in the form of a proposed judicial consent decree, was approved and entered by the U.S.
Added
The decree resolved allegations by EPA and IDEM that AES Indiana had violated the federal Clean Air Act (“CAA”) at its Petersburg Station, which AES denies.
Removed
District Court for the Southern District of Indiana on March 23, 2021, and includes, among other items, the following requirements: annual caps on NO x and SO 2 emissions and more stringent emissions limits than AES Indiana's current Title V air permit; payment of civil penalties totaling $1.5 million; a $5 million environmental mitigation project consisting of the construction and operation of a new, non-emitting source of generation at the site; expenditure of $0.3 million on a state-only environmentally beneficial project to preserve local, ecologically-significant lands; and retirement of Units 1 and 2 prior to July 1, 2023.
Added
Under the decree, AES Indiana agreed to certain emission limits and annual caps on NOx, SO 2 and PM emissions at the four Units at the station; paid a civil penalty of $1.525 million; retired Units 1 and 2, spent $325,000 on an environmentally beneficial project to preserve local, ecologically-significant lands (notice of completion of which was provided May 8, 2025 and confirmed satisfactory by IDEM on September 8, 2025); and will spend a total of $5 million on a further environmental mitigation project to build and operate a new, non-emitting source of generation at the site.
Removed
CFE alleged that AES Mérida was in breach of a power and capacity purchase agreement (“Contract”) between the two parties, even though the allegations relate to CFE’s own failure to provide fuel within the specifications of the Contract.
Added
The AES companies have moved to dismiss the lawsuit. That motion has been briefed and argued, and is under consideration by the relevant court of first instance.
Removed
CFE sought to recover approximately $200 million in payments made to AES Mérida under the Contract, plus approximately $480 million in alleged damages for having to acquire power from alternative sources in the Yucatan Peninsula. AES Mérida filed an answer denying liability to CFE and asserted a counterclaim for damages due to CFE’s breach of its obligations.
Added
The appellate court heard the parties’ respective oral arguments in September 2025. A decision on the appeal is pending. The AES Defendants believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
Removed
The evidentiary hearing took place in November 2021. Closing arguments were heard in May 2022. In November 2022, the arbitration Tribunal issued its decision in the case, rejecting CFE’s claims for damages and awarding AES Mérida a net amount of damages on AES Mérida’s counterclaims ("Award").
Added
AES Andes has completed the Compliance Program and is planning to file its final report in Q3-2025. The SMA will review the final report. If the SMA approves the final report, the Compliance Program will be considered fully completed, and thus any alleged charges associated with the same will be considered permanently waived.
Removed
There are ongoing proceedings in the Mexican courts concerning AES Mérida's attempt to enforce the Award and CFE's attempt to challenge the Award. At AES Mérida's request, in November 2024, the court of first instance confirmed the award and ordered its enforcement against CFE. This decision is subject to further review within the Mexican judiciary.
Added
The resolution imposes a fine of $27,615,140 pesos (approximately $1.5 million), as well as a series of corrective measures. On March 3, 2023, TEP filed a lawsuit in an administrative court—The Specialized Chamber of the Federal Administrative Justice Tribunal (“Chamber”)—challenging the legality of the Agency’s resolution and fine.
Removed
Separately, in March 2024, the relevant court of first instance denied CFE’s request to nullify the Award. The March 2024 decision was upheld by the relevant federal District Court and later by the Collegiate Circuit Court.
Added
On May 30, 2025, the Chamber issued a final administrative ruling denying TEP’s lawsuit. On July 1, 2025, TEP appealed to the Federal District Court. TEP’s appeal challenges the constitutionality of the Agency’s regulations ( demanda de amparo ) and requests a stay of enforcement of the Chamber’s final administrative ruling.
Removed
AES Mérida believes that it has meritorious claims and defenses and will assert them vigorously in this dispute; however, there can be no assurances that it will be successful in its efforts. On May 12, 2021, the Mexican Federal Attorney for Environmental Protection (the “Authority”) initiated an environmental audit at the TEP thermal generating facility.
Added
The parties have completed briefing on the Company’s motion to dismiss the lawsuit. That motion is under consideration by the CFI. The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in this proceeding; however, there can be no assurances that it will be successful in its efforts.
Removed
On March 3, 2023, the facility filed a nullity judgment to challenge such resolution, which has been admitted by the local judge with an injunction granted against execution of the proposed fine during the course of the underlying proceedings.
Added
On October 15, 2025 Alto Maipo submitted to SMA its defense response to the four alleged charges. If Alto Maipo’s defense response arguments are not acceptable to the SMA, the imposition of fines is possible.
Removed
However, the local tax authority rejected receiving the bond that is required to guarantee the injunction, and as a result, on September 18, 2023, TEP filed a complaint seeking to compel the tax authority to accept the bond and recognize the validity of the injunction.
Added
Separately, Alto Maipo filed a legal action seeking annulment of the decision that rejected its proposed compliance program. 74 | 2025 Annual Report In April 2025, an alleged shareholder of Fluence Energy, Inc. (“Fluence”) filed a putative securities class action in the U.S.
Removed
The Specialized Chamber has not issued a response to the complaint, despite the fact that the Company has taken several legal actions to try to expedite the proceedings.
Added
District Court for the Eastern District of Virginia (“Court”) against Fluence and certain of Fluence’s officers and directors. The complaint in the case also named the Company and AES Grid Stability, LLC as defendants (together, the “AES Defendants”).
Removed
If appeals are unsuccessful, the imposition of fines are possible. In May 2024, the Chilean competition agency (the Fiscalía Nacional Económica or “FNE”) opened an investigation regarding AES Andes’s declarations with respect to coal prices and coal blends used to generate electricity in Chile.
Added
In May 2025, the Court consolidated the lawsuit with another putative securities class action against Fluence and certain of its officers and directors. The Court also appointed a lead plaintiff (the “Plaintiff”) and lead plaintiffs’ counsel for the consolidated lawsuit.
Removed
The investigation was prompted by a confidential complaint filed in December 2023, which has not been disclosed to AES Andes. In general terms, the investigation seeks to determine whether the facts alleged in the complaint could be considered as an abuse of a dominant position by AES Andes.
Added
In June 2025, the Plaintiff filed a consolidated amended complaint against Fluence, certain of its officers and directors (the “Individual Fluence Defendants” and, together with Fluence, the “Fluence Defendants”), and the AES Defendants.
Removed
The investigation is at a very early stage; AES Andes is currently responding to the FNE’s information requests. The FNE will independently conduct the investigation and will ultimately decide whether to dismiss the matter or initiate a judicial proceeding on the allegations in the confidential complaint. These types of investigations in Chile commonly last for years.
Added
The Plaintiff seeks to pursue claims on behalf of a putative class of all purchasers of Fluence Class A common stock between October 28, 2021 and February 10, 2025.
Removed
AES Andes does not believe that it has violated any competition laws. Further, if the FNE ever initiates a judicial proceeding on this matter, AES Andes will defend itself vigorously.
Added
The Plaintiff alleges that the Fluence Defendants made allegedly false or misleading statements in violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), as well as Rule 10b-5 promulgated thereunder.
Removed
Given the early nature of this investigation, we are unable to estimate any potential impact of the investigation or its eventual outcome on our business, financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 79 | 2024 Annual Report PART II
Added
In addition, the Plaintiff asserts claims against the Individual Fluence Defendants and the AES Defendants as alleged “control persons” under Section 20(a) of the Exchange Act. In July 2025, the Fluence Defendants and the AES Defendants filed separate motions to dismiss the consolidated lawsuit. The motions are now fully briefed and pending before the Court.
Added
In May 2025, a special session of the Federal Regional Court of the 1st Region of Brazil ("TRF1”) issued a decision dismissing the claims of Sul, which was sold to a third party in 2016 (“Buyer”), to annul ANEEL’s Order 288.
Added
Order 288 was issued in May 2002 and retroactively changed the effects of the Wholesale Energy Market (“MAE”) for the year 2001. The aggregate impact of Order 288 for AES Sul was to reverse a gain on certain purchases and sales into an approximately R$75 million ($14 million) loss, estimated as of May 2002.
Added
The TRF1’s May 2025 decision reversed its April 2013 decision in Sul’s favor that annulled Order 288. In August 2025, Sul filed a motion for clarification of the decision with the TRF1, which is considering the motion.
Added
After the motion is decided, Sul will have the ability to file appeals with the Superior Court of Justice and the Supreme Federal Court.
Added
In the event of an unsuccessful outcome for Sul, the Buyer may attempt to seek recovery of losses relating to the R$75 million ($14 million) loss above, an additional amount of approximately R$27 million ($5 million) that was collected by Sul in 2008 and may need to be reimbursed, plus interest on these amounts, from the AES seller and The AES Corporation under the sale agreement.
Added
In that event, AES would defend itself vigorously; however, there can be no assurances that it would be successful in its efforts.
Added
On May 30, 2025, an arbitral tribunal (the “Tribunal”) of the International Centre for the Settlement of Investment Disputes (“ICSID”) issued an arbitration award in the Company’s favor (“Award”) in connection with a treaty arbitration initiated by the Company against the Argentine Republic (“Argentina”) under the US-Argentina bilateral investment treaty (“BIT”).
Added
In the Award, the Tribunal found that certain measures taken by Argentina in relation to its power sector, beginning in late 2001, breached the BIT. The Tribunal ordered Argentina to pay to the Company approximately $733 million in damages, including an award of costs, as well as accrued interest. In August 2025, the Company filed a lawsuit in the U.S.
Added
District Court for the District of Columbia (“DDC”) to recognize and enforce the ICSID Award against Argentina. In September 2025, Argentina filed an application with ICSID to annul the Tribunal’s Award. In its application, Argentina also requested a stay of enforcement of the Award pending the completion of the annulment proceedings ("Stay Request").
Added
Argentina’s annulment application, as well as its Stay Request, will be decided by a new three-person panel appointed by ICSID (“Annulment Panel”). In January 2026, ICSID appointed the Annulment Panel. The Company has opposed Argentina's Stay Request. Pending the Annulment Panel's decision on the Stay Request, the Company’s enforcement efforts in the DDC will be provisionally stayed.
Added
The Company can provide no assurance as to how the Annulment Panel will rule on Argentina’s Stay Request or the merits of the annulment application. Relatedly, measures to enforce the Award through judicial means entail a process that is inherently unpredictable; as a result, the Company cannot provide any assurance as to the timing or success of such enforcement measures.
Added
The Company may attempt to settle this dispute with Argentina. However, the Company can provide no assurances regarding the likelihood, substance, or timing of any such settlement. On December 30, 2025, The Company received a complaint filed in Virginia state court by Sinolam LNG Terminal, SA and Sinolam Smarter Energy LNG Power Co.
Added
(collectively, “Plaintiffs”) against the Company, AES Latin America, S. de R.I., AES Panama, S.R.I. (“AES Panama”), AES Colon Holdings, S. de R.I., Costa Norte LNG Terminal S. de. R.I., Gas Natural del Atlantico S. de R.I., InterEnergy Holdings (UK) Limited (“IEHL”) (a third party), and Group Energy Gas Panama S. de. R.I.
Added
(a partnership between IEHL and AES Panama) (collectively, “Defendants”). In their complaint, the Plaintiffs allege that the Defendants interfered with the Plaintiffs’ efforts to 75 | 2025 Annual Report develop an LNG-fired power plant and an LNG terminal in Panama.
Added
The Plaintiffs appear to seek recovery of alleged lost profits totaling about $4 billion, alleged out-of-pocket damages, interest, statutory damages, and other relief from the Defendants.
Added
The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in this lawsuit; however, there can be no assurances that it will be successful in its efforts. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 76 | 2025 Annual Report PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

3 edited+0 added−0 removed0 unchanged
ITEM 4. MINE SAFETY DISCLOSURES 78 PART II 79 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 79 ITEM 6. [RESERVED] 80 ITEM 7.
ITEM 4. MINE SAFETY DISCLOSURES 75 PART II 76 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 76 ITEM 6. [RESERVED] 77 ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 81 Executive Summary 81 Review of Consolidated Results of Operations 82 SBU Performance Analysis 87 Key Trends and Uncertainties 94 Capital Resources and Liquidity 99 Critical Accounting Policies and Estimates 109 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 113 ITEM 8.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 78 Executive Summary 78 Review of Consolidated Results of Operations 79 SBU Performance Analysis 85 Key Trends and Uncertainties 92 Capital Resources and Liquidity 100 Critical Accounting Policies and Estimates 109 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 114 ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 116 Consolidated Balance Sheets 120 Consolidated Statements of Operations 121 Consolidated Statements of Comprehensive Income (Loss) 122 Consolidated Statements of Changes in Equity 123 Consolidated Statements of Cash Flows 124 Note 1 - General and Summary of Significant Accounting Policies 126 Note 2 - Inventory 138 Note 3 - Property, Plant and Equipment 138 Note 4 - Asset Retirement Obligation s 138 Note 5 - Fair Value 139 Note 6 - Derivative Instruments and Hedging Activities 146 Note 7 - Financing Receivables 147 Note 8 - Allowance for Credit Losses 148 Note 9 - Investments in and Advances to Affiliates 149 Note 10 - Goodwill and Other Intangible Assets 151 Note 1 1 - Regulatory Assets and Liabilities 153 Note 1 2 - Obligations 154 Note 1 3 - Commitments 160 Note 1 4 - Contingencies 160 Note 1 5 - Leases 161 Note 1 6 - Benefit Plans 163 Note 1 7 - Redeemable Stock of Subsidiaries 166 Note 1 8 - Equity 168 Note 19 - Segments and Geographic Information 173 Note 2 0 - Share-Based Compensation 177 Note 2 1 - Revenue 179 Note 2 2 - Other Income and Expense 180 Note 2 3 - Asset Impairment Expense 182 Note 2 4 - Income Taxes 184 Note 2 5 - Held-for-Sale and Dispositions 187 Note 2 6 - Acquisitions 189 Note 2 7 - Earnings Per Share 192 Note 2 8 - Risks and Uncertainties 192 Note 29 - Related Party Transactions 194 Note 3 0 - Restatement (Unaudited) 195 Note 3 1 - Subsequent Events 201
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 117 Consolidated Balance Sheets 120 Consolidated Statements of Operations 121 Consolidated Statements of Comprehensive Income (Loss) 122 Consolidated Statements of Changes in Equity 123 Consolidated Statements of Cash Flows 124 Note 1 - General and Summary of Significant Accounting Policies 126 Note 2 - Inventory 139 Note 3 - Property, Plant , and Equipment 139 Note 4 - Asset Retirement Obligation s 140 Note 5 - Fair Value 140 Note 6 - Derivative Instruments and Hedging Activities 146 Note 7 - Financing Receivables 147 Note 8 - Allowance for Credit Losses 148 Note 9 - Investments in and Advances to Affiliates 149 Note 10 - Goodwill and Other Intangible Assets 150 Note 11 - Regulatory Assets and Liabilities 152 Note 12 - Obligations 153 Note 13 - Commitments 159 Note 14 - Contingencies 159 Note 15 - Leases 161 Note 16 - Benefit Plans 163 Note 17 - Redeemable Stock of Subsidiaries 166 Note 18 - Equity 169 Note 19 - Segments and Geographic Information 174 Note 20 - Share-Based Compensation 179 Note 21 - Revenue 181 Note 22 - Other Income and Expense 182 Note 23 - Asset Impairment Expense 184 Note 24 - Income Taxes 186 Note 25 - Held-for-Sale and Dispositions 191 Note 26 - Acquisitions 193 Note 27 - Earnings Per Share 195 Note 28 - Risks and Uncertainties 197 Note 29 - Related Party Transactions 198 N ote 30 - Restructu ring 199 Note 3 1 - Discontinued Operations 199 Note 3 2 - Subsequent Events 200

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed6 unchanged
The cumulative repurchases from the commencement of the Stock Repurchase Program in July 2010 through December 31, 2024 totaled 154.3 million shares for a total cost of $1.9 billion, at an average price per share of $12.12 (including a nominal amount of commissions). As of December 31, 2024, $264 million remained available for repurchase under the Stock Repurchase Program.
The cumulative repurchases from the commencement of the Stock Repurchase Program in July 2010 through December 31, 2025 totaled 154.3 million shares for a total cost of $1.9 billion, at an average price per share of $12.12 (including a nominal amount of commissions). As of December 31, 2025, $264 million remained available for repurchase under the Stock Repurchase Program.
The S&P 500 Utilities Index is a published sector index comprising the 31 electric and gas utilities included in the S&P 500. The five year total return chart assumes $100 invested on December 31, 2019 in AES Common Stock, the S&P 500 Index and the S&P 500 Utilities Index.
The S&P 500 Utilities Index is a published sector index comprising the 31 electric and gas utilities included in the S&P 500. The five-year total return chart assumes $100 invested on December 31, 2020 in AES Common Stock, the S&P 500 Index, and the S&P 500 Utilities Index.
No repurchases were made by The AES Corporation of its common stock in 2024, 2023, and 2022. Market Information Our common stock is traded on the New York Stock Exchange under the symbol "AES." Dividends The Parent Company commenced a quarterly cash dividend in the fourth quarter of 2012. The Parent Company has increased this dividend annually.
No repurchases were made by The AES Corporation of its common stock in 2025, 2024, and 2023. Market Information Our common stock is traded on the New York Stock Exchange under the symbol "AES." Dividends The Parent Company commenced a quarterly cash dividend in the fourth quarter of 2012. The Parent Company increased this dividend annually until 2025.
The quarterly per-share cash dividends for the last three years are displayed below. Commencing the fourth quarter of 2024 2023 2022 Cash dividend $0.17595 $0.1725 $0.1659 The fourth quarter 2024 cash dividend was paid on February 14, 2025 .
The quarterly per-share cash dividends for the last three years are displayed below. Commencing the fourth quarter of 2025 2024 2023 Cash dividend $0.17595 $0.17595 $0.1725 The fourth quarter 2025 cash dividend was paid on February 13, 2026 .
Holders As of March 6, 2025, there were approximately 3,301 record holders of our common stock. 80 | 2024 Annual Report Performance Graph THE AES CORPORATION PEER GROUP INDEX/STOCK PRICE PERFORMANCE Source: Bloomberg We have selected the Standard and Poor's ("S&P") 500 Utilities Index as our peer group index.
Holders As of February 26, 2026, there were approximately 3,219 record holders of our common stock. 77 | 2025 Annual Report Performance Graph THE AES CORPORATION PEER GROUP INDEX/STOCK PRICE PERFORMANCE Source: Bloomberg We have selected the Standard and Poor's ("S&P") 500 Utilities Index as our peer group index.
Under the terms of our revolving credit facilities, which we entered into with commercial bank syndicates, we have limitations on our ability to pay cash dividends and/or repurchase stock.
Our ability to pay dividends will also depend on receipt of dividends from our various subsidiaries across our portfolio. Under the terms of our revolving credit facilities, which we entered into with commercial bank syndicates, we have limitations on our ability to pay cash dividends and/or repurchase stock.
There can be no assurance the AES Board will declare a dividend in the future or, if declared, the amount of any dividend. Our ability to pay dividends will also depend on receipt of dividends from our various subsidiaries across our portfolio.
The first quarter 2026 cash dividend was declared on February 19, 2026 and is consistent with the fourth quarter 2025 cash dividend. There can be no assurance the AES Board will declare a dividend in the future or, if declared, the amount of any dividend.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

180 edited+116 added−67 removed118 unchanged
See S BU Performance Analysis—Non-GAAP Measures for definition and Item 1. — Business for the respective ownership interest for key businesses.
See S BU Performance Analysis—Non-GAAP Measures for definition and Item 1. — Business for the respective ownership interest for key businesses.
(2) Adjusted EBITDA with Tax Attributes includes the impact of the share of the ITCs, PTCs, and depreciation deductions allocated to tax equity investors under the HLBV accounting method and recognized as Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries on the Consolidated Statements of Operations.
(2) Adjusted EBITDA with Tax Attributes includes the impact of the share of the ITCs, PTCs, and depreciation deductions allocated to tax equity investors under the HLBV accounting method and recognized as Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries on the Consolidated Statements of Operations.
Additionally, the Uyghur Forced Labor Prevention Act (“UFLPA”) seeks to block the import of products made with forced labor in certain areas of China, at any point in the supply chain, and may lead to certain suppliers being blocked from importing solar cells and panels to the U.S.
Additionally, the Uyghur Forced Labor Prevention Act (“UFLPA”) seeks to block the import of products made with forced labor in certain areas of China, at any point in the supply chain, and may lead to certain suppliers being blocked from importing solar cells and panels into the U.S.
The GAAP measure most comparable to Adjusted PTC is income from continuing operations attributable to The AES Corporation . We believe that Adjusted PTC better reflects the underlying business performance of the Company and is the most relevant measure considered in the Company's internal evaluation of the financial performance of its segments.
The GAAP measure most comparable to Adjusted PTC is income from continuing operations attributable to The AES Corporation . We believe that Adjusted PTC better reflects the underlying business performance of the Company and is a relevant measure considered in the Company's internal evaluation of the financial performance of its segments.
Some of our subsidiaries are currently in default with respect to all or a portion of their outstanding indebtedness. The total non-recourse debt classified as current in the accompanying Consolidated Balance Sheets amounts to $2.7 billion.
Some of our subsidiaries are currently in default with respect to all or a portion of their outstanding indebtedness. The total non-recourse debt classified as current in the accompanying Consolidated Balance Sheets amounts to $2.2 billion.
A material subsidiary is defined in the Parent Company's revolving credit agreement as any business that contributed 20% or more of the Parent Company's total cash distributions from businesses for the four most recently completed fiscal quarters. As of December 31, 2024, none of the defaults listed above resulted in a cross-default under the recourse debt of the Parent Company.
A material subsidiary is defined in the Parent Company's revolving credit agreement as any business that contributed 20% or more of the Parent Company's total cash distributions from businesses for the four most recently completed fiscal quarters. As of December 31, 2025, none of the defaults listed above resulted in a cross-default under the recourse debt of the Parent Company.
Macroeconomic and Political The macroeconomic and political environments in some countries where our subsidiaries conduct business have changed during 2024. This could result in significant impacts to tax laws and environmental and energy policies. Additionally, we operate in multiple countries and as such are subject to volatility in exchange rates at the subsidiary level.
Macroeconomic and Political The macroeconomic and political environments in some countries where our subsidiaries conduct business have changed during 2025. This could result in significant impacts to tax laws and environmental and energy policies. Additionally, we operate in multiple countries and as such are subject to volatility in exchange rates at the subsidiary level.
These noncurrent receivables mostly consist of accounts receivable in the U.S. and Chile that, pursuant to amended agreements or government resolutions, have collection periods that extend beyond December 31, 2025, or one year from the latest balance sheet date. Noncurrent receivables in the U.S. pertain to the sale of the Redondo Beach land.
These noncurrent receivables mostly consist of accounts receivable in the U.S. and Chile that, pursuant to amended agreements or government resolutions, have collection periods that extend beyond December 31, 2026, or one year from the latest balance sheet date. Noncurrent receivables in the U.S. pertain to the sale of the Redondo Beach land.
Key Trends and Uncertainties During 2025 and beyond, we expect to face the following challenges at certain of our businesses. Management expects that improved operating performance at certain businesses, growth from new businesses, and global cost reduction initiatives may lessen or offset their impact.
Key Trends and Uncertainties During 2026 and beyond, we expect to face the following challenges at certain of our businesses. Management expects that improved operating performance at certain businesses, growth from new businesses, and global cost reduction initiatives may lessen or offset their impact.
Tax Asset Realizability — Certain AES Chilean businesses have recorded net deferred tax assets ("DTA") of $232 million relating primarily to net operating loss carryforwards, which are not subject to expiration. Their realization is dependent on generating sufficient taxable income.
Tax Asset Realizability — Certain AES Chilean businesses have recorded net deferred tax assets ("DTA") of $243 million relating primarily to net operating loss carryforwards, which are not subject to expiration. Their realization is dependent on generating sufficient taxable income.
New Accounting Pronouncements See Note 1— General and Summary of Significant Accounting Policies included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information about new accounting pronouncements adopted during 2024 and accounting pronouncements issued, but not yet effective.
New Accounting Pronouncements See Note 1— General and Summary of Significant Accounting Policies included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information about new accounting pronouncements adopted during 2025 and accounting pronouncements issued, but not yet effective.
(3) Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2024 and do not reflect anticipated future refinancing, early redemptions or new debt issuances. Variable rate interest obligations are estimated based on rates as of December 31, 2024.
(3) Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2025 and do not reflect anticipated future refinancing, early redemptions, or new debt issuances. Variable rate interest obligations are estimated based on rates as of December 31, 2025.
The GAAP measure most comparable to Adjusted EPS is diluted earnings per share from continuing operations. We believe that Adjusted EPS better reflects the underlying business performance of the Company and is considered in the Company's internal evaluation of financial performance.
The GAAP measure most comparable to Adjusted EPS is diluted earnings per share from continuing operations. We believe that Adjusted EPS better reflects the underlying business performance of the Company and is a relevant measure considered in the Company's internal evaluation of financial performance.
The primary sources of cash for the Company in the year ended December 31, 2023 were debt financings, cash flows from operating activities, sales to noncontrolling interests, purchases under supplier financing arrangements, and sales of short-term investments.
The primary sources of cash for the Company in the year ended December 31, 2024 were debt financings, cash flows from operating activities, purchases under supplier financing arrangements, sales to noncontrolling interests, and sales of short-term investments.
While we do not expect that we will be required to fund any material amounts under these contingent contractual obligations beyond 2024, many of the events which would give rise to such obligations are beyond our control.
While we do not expect that we will be required to fund any material amounts under these contingent contractual obligations beyond 2025, many of the events which would give rise to such obligations are beyond our control.
SBU Performance Analysis Segments We are organized into four technology-based SBUs: Renewables (solar, wind, energy storage, and hydro generation facilities); Utilities (AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities); Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities, and our businesses in Chile); and New Energy Technologies (investments in Fluence, Uplight, Maximo, and other new and innovative energy technology businesses).
SBU Performance Analysis Segments We are organized into four technology-based SBUs: Renewables (solar, wind, energy storage, and hydro generation facilities); Utilities (AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities); Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities); and New Energy Technologies (investments in Fluence, Maximo, and other new and innovative energy technology businesses).
Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, strategic decisions to dispose of or acquire business interests or retire debt, and the variability of allocations of earnings to tax equity investors, which affect results in a given period or periods.
Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, strategic decisions to dispose of or acquire business interests, retire debt, or implement restructuring initiatives, and the variability of allocations of earnings to tax equity investors, which affect results in a given period or periods.
(8) Amount primarily relates to losses incurred at AES Andes due to early retirement of debt of $29 million, or $0.04 per share, and costs incurred due to troubled debt restructuring at Puerto Rico of $20 million, or $0.03 per share.
(7) Amount primarily relates to losses incurred at AES Andes due to early retirement of debt of $29 million, or $0.04 per share, and costs incurred due to troubled debt restructuring at Puerto Rico of $20 million, or $0.03 per share.
Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, and strategic decisions to dispose of or acquire business interests or retire debt, which affect results in a given period or periods.
Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, and strategic decisions to dispose of or acquire business interests, retire debt, or implement restructuring initiatives, which affect results in a given period or periods.
Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, and strategic decisions to dispose of or acquire business interests or retire debt, which affect results in a given period or periods.
Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, and strategic decisions to dispose of or acquire business interests, retire debt, or implement restructuring initiatives, which affect results in a given period or periods.
It is not yet possible to predict the impact of these regulations on our consolidated results of operations, cash flows, and financial condition. Puerto Rico — Our subsidiaries in Puerto Rico have long-term PPAs with state-owned PREPA, which has been facing economic challenges that could result in a material adverse effect on our business in Puerto Rico.
It is not yet possible to predict the impact of these regulations in our consolidated results of operations, cash flows, and financial condition. 98 | 2025 Annual Report Puerto Rico — Our subsidiaries in Puerto Rico have long-term PPAs with state-owned PREPA, which has been facing economic challenges that could result in a material adverse effect on our business in Puerto Rico.
In addition, changes in the timing of tariff increases or delays in the regulatory determinations under the relevant concessions could affect the cash flows and results of operations of our businesses. Long-Term Receivables As of December 31, 2024, the Company had approximately $102 million of gross accounts receivable classified as Other noncurrent assets .
In addition, changes in the timing of tariff increases or delays in the regulatory determinations under the relevant concessions could affect the cash flows and results of operations of our businesses. Long-Term Receivables As of December 31, 2025, the Company had approximately $119 million of gross accounts receivable classified as Other noncurrent assets .
Impairments and Realizability Long-lived Assets and Current Assets Held-for-Sale — During the year ended December 31, 2024, the Company recognized asset impairment expense of $374 million. See Note 23— Asset Impairment Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information.
Impairments and Realizability Long-lived Assets and Current Assets Held-for-Sale — During the year ended December 31, 2025, the Company recognized asset impairment expense of $224 million. See Note 23— Asset Impairment Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information.
The covenants provide for, among other items, limitations on other indebtedness, liens, investments and guarantees; limitations on dividends, stock repurchases and other equity transactions; restrictions and limitations on mergers and acquisitions, sales of assets, leases, transactions with affiliates and off-balance sheet and derivative arrangements; maintenance of certain financial ratios; and financial and other reporting requirements.
The covenants provide for, among other items, limitations on other indebtedness, liens, investments and guarantees; limitations on dividends, stock repurchases and other equity transactions; restrictions and limitations on mergers and acquisitions, sales of assets, leases, transactions with affiliates and off-balance sheet and derivative arrangements; maintenance of certain financial ratios; and financial 108 | 2025 Annual Report and other reporting requirements.
Changes in any of these assumptions could result in management reaching a different conclusion regarding the potential impairment, which could be material. Our impairment evaluations inherently involve uncertainties from uncontrollable events that could positively or negatively impact the anticipated future economic and operating conditions.
Changes in any of these assumptions could result in management reaching a different conclusion regarding the potential impairment, which could be material. Our impairment evaluations 111 | 2025 Annual Report inherently involve uncertainties from uncontrollable events that could positively or negatively impact the anticipated future economic and operating conditions.
On June 21, 2024, President Biden issued Proclamation 10779, revoking the exclusion of bifacial panels from safeguard relief previously proclaimed in Proclamation 10339, and reinstating the tariff on bifacial panels under the Section 201 Safeguard Action, subject to certain qualifications. These global tariffs are expected to expire in February 2026.
On June 21, 2024, President Biden issued Proclamation 10779, revoking the exclusion of bifacial panels from safeguard relief previously proclaimed in Proclamation 10339, and reinstating the tariff on bifacial panels under the Section 201 Safeguard Action, subject to certain qualifications. These global tariffs expired in February 2026.
The Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) was enacted to create a structure for exercising federal oversight over the fiscal affairs of U.S. territories and created procedures for 98 | 2024 Annual Report adjusting debt accumulated by the Puerto Rico government and, potentially, other territories (“Title III”).
The Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) was enacted to create a structure for exercising federal oversight over the fiscal affairs of U.S. territories and created procedures for adjusting debt accumulated by the Puerto Rico government and, potentially, other territories (“Title III”).
Nevertheless, the PPA Discussions involved a range of potential outcomes, including but not limited to the termination of the PPA and payment of some level of compensation to AES Maritza. Any negotiated resolution would be subject to mutually acceptable terms, lender consent, and DG Comp approval.
Nevertheless, the PPA Discussions involved a range of potential outcomes, including but not limited to the termination of the PPA and payment of some level of compensation to AES Maritza. Any negotiated resolution would be subject to mutually acceptable terms, lender 100 | 2025 Annual Report consent, and DG Comp approval.
Examples include electricity and fuel purchases, operations and maintenance costs, depreciation and amortization expenses, bad debt expense and recoveries, and general administrative and support costs (including employee-related costs directly associated with the operations of the business).
Examples include electricity and fuel purchases, O&M costs, depreciation and amortization expenses, bad debt expense and recoveries, and general administrative and support costs (including employee-related costs directly associated with the operations of the business).
Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, actual results could materially differ from the original estimates, requiring adjustments to these balances in future periods. Management has discussed these critical accounting policies with the Audit Committee, as appropriate.
Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, actual results could materially differ from the original estimates, requiring adjustments to 110 | 2025 Annual Report these balances in future periods. Management has discussed these critical accounting policies with the Audit Committee, as appropriate.
Given its large number of businesses and overall complexity, the Company concluded that Adjusted 89 | 2024 Annual Report EBITDA is a more transparent measure than Net income that better assists investors in determining which businesses have the greatest impact on the Company’s results.
Given its large number of businesses and overall complexity, the Company concluded that Adjusted EBITDA is a more transparent measure than Net income that better assists investors in determining which businesses have the greatest impact on the Company’s results.
We continue to monitor our operations and address challenges as they arise. For the risk factors related to our business, see Item 1.— Business and Item 1A.— Risk Factors of this Form 10-K. Operational Trade Restrictions and Supply Chain — In recent years, the U.S.
We continue to monitor our operations and address challenges as they arise. For the risk factors related to our business, see Item 1.— Business and Item 1A.— Risk Factors of this Form 10-K. Operational Trade Restrictions and Supply Chain — In April 2022, the U.S.
Management applies judgment in the selection of such companies based on its view of the most likely market participants. It is reasonably possible that the selection of a different set of likely market participants could produce different input assumptions and result in the use of a different discount rate.
Management applies judgment in the selection of such companies based on its view of the 112 | 2025 Annual Report most likely market participants. It is reasonably possible that the selection of a different set of likely market participants could produce different input assumptions and result in the use of a different discount rate.
However, there can be no assurance that, in the context of DG Comp's preliminary review or any future PPA Discussions, the other parties will not seek a prompt termination of the PPA. We do not believe termination of the PPA is justified.
The PPA continues to remain in place. However, there can be no assurance that, in the context of DG Comp’s preliminary review or any future PPA Discussions, the other parties will not seek a prompt termination of the PPA. We do not believe termination of the PPA is justified.
We define Adjusted EBITDA as EBITDA adjusted for the impact of NCI and interest, taxes, depreciation, amortization, and accretion of AROs of our equity affiliates, adding back interest income recognized under service concession arrangements, and excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits, and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; and (e) gains, losses, and costs due to the early retirement of debt or troubled debt restructuring.
We define Adjusted EBITDA as EBITDA adjusted for the impact of NCI and interest, taxes, depreciation, amortization, and accretion of AROs of our equity affiliates, adding back interest income recognized under service concession arrangements, and excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits, and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses, and costs due to the early retirement of debt or troubled debt restructuring; and (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts.
As of December 31, 2024, we were in compliance with these covenants at the Parent Company level.
As of December 31, 2025, we were in compliance with these covenants at the Parent Company level.
On the other hand, if shareholder rights are only protective in nature (referred to as protective rights), then such rights would not overcome the presumption that the owner of a majority voting interest shall consolidate its investee.
On the other hand, if shareholder rights are only protective in nature (referred to as protective rights), then such rights would not 113 | 2025 Annual Report overcome the presumption that the owner of a majority voting interest shall consolidate its investee.
Additional 111 | 2024 Annual Report discussion regarding the nature of these financial instruments and valuation techniques can be found in Note 5— Fair Value included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K.
Additional discussion regarding the nature of these financial instruments and valuation techniques can be found in Note 5— Fair Value included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K.
However, there can be no assurance that this matter will be resolved favorably; if it is not, there could be a material adverse effect on the Company’s financial condition, results of operation, and cash flows. As of December 31, 2024, the carrying value of our long-lived assets at Maritza is $309 million.
However, there can be no assurance that this matter will be resolved favorably; if it is not, there could be a material adverse effect on the Company’s financial condition, results of operations, and cash flows. As of December 31, 2025, the carrying value of our long-lived assets at Maritza is $64 million.
See S BU Performance Analysis—Non-GAAP Measures for definition and Item 1. — Business for the respective ownership interest for key businesses. Operating Margin increased $2 million, with no material drivers.
See S BU Performance Analysis—Non-GAAP Measures for definition and Item 1. — Business for the respective ownership interest for key businesses. Operating Margin decreased $4 million, with no material drivers.
As of December 31, 2024, the total maximum outstanding amount of hedges protecting the company against variable rate exposure was $7.9 billion. These hedges generally provide economic protection through the entire expected life of the projects, regardless of the type of debt issued to finance construction or refinance the projects in the future.
As of December 31, 2025, the total maximum outstanding amount of hedges protecting the company against current and expected variable rate exposure was $9.1 billion. These hedges generally provide economic protection through the entire expected life of the projects, regardless of the type of debt issued to finance construction or refinance the projects in the future.
The impact of new tariffs, including reciprocal tariffs, or Commerce investigations, the impact of any additional adverse Commerce determinations or other tariff disputes or litigation, the impact of the UFLPA, potential future disruptions to the renewable energy supply chain and their effect on AES’ U.S. renewable energy project development and construction activities remain uncertain.
Government investigations or proclamations, the impact of any additional adverse Commerce determinations or other tariff disputes or litigation, the impact of the UFLPA, the potential future disruptions to the renewable energy supply chain and their effect on AES’ U.S. project development and construction activities remain uncertain.
Of the total capitalized in 2024 and 2023, $577 million and $486 million, respectively, are related to recourse and non-recourse debt interest payments. The remaining capitalized interest is primarily related to supplier financing arrangements.
Of the total capitalized in 2025 and 2024, $483 million and $577 million, respectively, are related to recourse and non-recourse debt interest payments. The remaining capitalized interest is primarily related to supplier financing arrangements.
The tax attributes are related to the Renewables and Utilities SBUs. 90 | 2024 Annual Report Adjusted PTC We define Adjusted PTC as pre-tax income from continuing operations attributable to The AES Corporation excluding gains or losses of the consolidated entity due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits, and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; and (e) gains, losses and costs due to the early retirement of debt or troubled debt restructuring.
The tax attributes are related to the Renewables and Utilities SBUs. 88 | 2025 Annual Report Adjusted PTC We define Adjusted PTC as pre-tax income from continuing operations attributable to The AES Corporation excluding gains or losses of the consolidated entity due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits, and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt or troubled debt restructuring; and (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts.
Similarly, in certain of our businesses, the Parent Company may provide financial guarantees or other credit support in support of tax equity partnerships or for the benefit of counterparties who have entered into contracts for the purchase or sale of electricity, equipment, or other services with our subsidiaries or lenders.
Similarly, in certain of our businesses, the Parent Company may provide financial and performance-related guarantees or other credit support for the benefit of counterparties who have entered into contracts for the purchase or sale of electricity, equipment, or other services with our subsidiaries or lenders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For discussion of the Company's year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Item 7. —Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K filed with the SEC on February 26, 2024.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For discussion of the Company's year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Item 7. —Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K filed with the SEC on March 11, 2025.
See Note 23— Asset Impairment Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for details of the asset impairments. Our effective tax rate reflects the tax effect of significant operations outside the U.S., which are generally taxed at rates different than the U.S. statutory rate.
See Note 23— Asset Impairment Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for additional information regarding the Mong Duong reclassification. Our effective tax rate reflects the tax effect of significant operations outside the U.S., which are generally taxed at rates different than the U.S. statutory rate.
Department of Commerce (“Commerce”) has initiated investigations into whether imports into the U.S. of solar cells and panels from Cambodia, Malaysia, Thailand, and Vietnam (“Southeast Asia”) are circumventing antidumping and countervailing duty (“AD/CVD”) orders on solar cells and panels from China.
Department of Commerce (“Commerce”) initiated an investigation into whether imports into the U.S. of solar cells and panels from Cambodia, Malaysia, Thailand, and Vietnam (“Southeast Asia”) were circumventing antidumping and countervailing duty (“AD/CVD”) orders on solar cells and panels from China.
The majority of our non-recourse debt is funded by international commercial banks, with debt capacity supplemented by multilaterals and local regional banks. Given our long-term debt obligations, the Company is subject to interest rate risk on debt balances that accrue interest at variable rates.
In certain cases, the currency is matched through the use of derivative instruments. The majority of our non-recourse debt is funded by international commercial banks, with debt capacity supplemented by multilaterals and local regional banks. Given our long-term debt obligations, the Company is subject to interest rate risk on debt balances that accrue interest at variable rates.
On a consolidated basis, of the Company's $28.8 billion of total gross debt outstanding as of December 31, 2024, approximately $8.9 billion accrues interest at variable rates. The Company actively hedges its current and expected variable rate exposure through a combination of currently effective and forward starting interest rate swaps.
On a consolidated basis, of the Company's $29.5 billion of total gross debt outstanding as of December 31, 2025, approximately $7.3 billion accrues interest at variable rates. The Company actively hedges its current and expected variable rate exposure through a combination of currently effective and forward starting interest rate swaps.
The Trump Administration has threatened or imposed tariffs on a wide range of countries and sectors. On February 10, 2025, President Trump signed Executive Orders modifying existing Section 232 tariffs on steel and aluminum imports to expand their scope of applicability and imposing 25% tariffs on both products.
The Trump Administration has threatened or imposed tariffs on a wide range of countries and products. On February 10, 2025, President Trump signed Executive Orders modifying existing tariffs under Section 232 of the Trade Expansion Act of 1962 ("Section 232") on steel and aluminum imports to expand their scope and impose 25% tariffs on both products.
See Note 22— Other Income and Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information. Gain (loss) on disposal and sale of business interests Gain on disposal and sale of business increased $217 million to $351 million in 2024, compared to $134 million in 2023.
See Note 22— Other Income and Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information. Gain on disposal and sale of business interests Gain on disposal and sale of business decreased $293 million to $58 million in 2025, compared to $351 million in 2024.
After recognizing these impairment expenses, the carrying value of our investments in long-lived assets and current assets held-for-sale that were assessed for impairment following a triggering event in 2024 totaled $124 million at December 31, 2024.
As of December 31, 2025, after recognizing these impairment expenses, the carrying value of our investments in long-lived assets and current assets held-for-sale that were assessed for impairment following a triggering event in 2025 was $109 million.
These efforts apply to the notional amount of the swaps compared to the amount of related underlying debt. Presently, the Parent Company does not have any material unhedged exposure to variable interest rate debt. Additionally, commercial paper issuances are short term in nature and subject the Parent Company to interest rate risk at the time of refinancing the paper.
Presently, the Parent Company does not have any material unhedged exposure to variable interest rate debt. Additionally, commercial paper issuances are short term in nature and subject the Parent Company to interest rate risk at the time of refinancing the paper.
Years Ended December 31, Reconciliation of Adjusted PTC (in millions) 2024 2023 Income from continuing operations, net of tax, attributable to The AES Corporation $ 1,686 $ 242 Income tax expense (benefit) attributable to The AES Corporation (19) 206 Pre-tax contribution 1,667 448 Unrealized derivative and equity securities losses (gains) (94) 41 Unrealized foreign currency losses 16 301 Disposition/acquisition gains (320) (79) Impairment losses 280 877 Loss on extinguishment of debt 65 70 Total Adjusted PTC $ 1,614 $ 1,658 91 | 2024 Annual Report Adjusted EPS We define Adjusted EPS as diluted earnings per share from continuing operations excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, the tax impact from the repatriation of sales proceeds, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; and (e) gains, losses and costs due to the early retirement of debt or troubled debt restructuring.
Years Ended December 31, Reconciliation of Adjusted PTC (in millions) 2025 2024 Income from continuing operations, net of tax, attributable to The AES Corporation $ 949 $ 1,686 Income tax expense (benefit) attributable to The AES Corporation (276) (19) Pre-tax contribution 673 1,667 Unrealized derivatives, equity securities, and financial assets and liabilities losses (gains) 116 (94) Unrealized foreign currency losses 26 16 Disposition/acquisition losses (gains) 244 (320) Impairment losses 369 280 Loss on extinguishment of debt and troubled debt restructuring 30 65 Restructuring costs 89 — Total Adjusted PTC $ 1,547 $ 1,614 89 | 2025 Annual Report Adjusted EPS We define Adjusted EPS as diluted earnings per share from continuing operations excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and the tax impact from the repatriation of sales proceeds, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses, and costs due to the early retirement of debt or troubled debt restructuring; and (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts.
As this adjustment was specific to certain contract terminations that occurred in 2020, we believe removing this adjustment from our non-GAAP definitions provides simplification and clarity for our investors. There were no such impacts in 2023 or 2024.
As this adjustment was specific to certain contract terminations that occurred in 2020, we believe removing this adjustment from our non-GAAP definitions provides simplification and clarity for our investors.
The Company also had non-recourse and recourse aggregate principal amounts of debt outstanding of $22.7 billion 100 | 2024 Annual Report and $5.7 billion, respectively. Of the $2.7 billion of our current non-recourse debt, $2.5 billion was presented as such because it is due in the next twelve months and $186 million relates to debt considered in default.
The Company also had non-recourse and recourse aggregate principal amounts of debt outstanding of $23.2 billion and $6 billion, respectively. Of the $2.2 billion of our current non-recourse debt, $2.2 billion was presented as such because it is due in the next twelve months and $20 million relates to debt considered in default.
While this has impacted the U.S. market, AES has managed this issue without significant impact to our projects. Further disruptions may impact our suppliers’ ability or 95 | 2024 Annual Report willingness to meet their contractual agreements or to continue to supply cells or panels into the U.S. market on terms that we deem satisfactory.
While this has impacted the U.S. market, AES has managed this issue without significant impact to our projects. Further forced labor designations of entities under the UFLPA may impact our suppliers’ ability or willingness to meet their contractual agreements or to continue to supply cells or panels into the U.S. market on terms that we deem satisfactory.
Cost of sales also includes the gains or losses on derivatives (including embedded derivatives other than foreign currency embedded derivatives) associated with the purchase of electricity or fuel.
Cost of sales also includes the gains or losses on derivatives (including embedded derivatives other than foreign currency embedded derivatives) associated with the purchase of electricity or fuel. Operating margin is defined as revenue less cost of sales.
Many of our subsidiaries depend on timely and continued access to capital markets to manage their liquidity needs. The inability to raise capital on favorable terms, to refinance existing indebtedness or to fund operations and other commitments during times of political or economic uncertainty may have material adverse effects on the financial condition and results of operations of those subsidiaries.
The inability to raise capital on favorable terms, to refinance existing indebtedness or to fund operations and other commitments during times of political or economic uncertainty may have material adverse effects on the financial condition and results of operations of those subsidiaries.
Additionally, in connection with certain project financings, some of the Company's subsidiaries have expressly undertaken limited obligations and commitments. These contingent contractual obligations are issued at the subsidiary level and are non-recourse to the Parent Company.
These letters of credit operate to guarantee performance relating to certain project development and construction activities and business operations. Additionally, in connection with certain project financings, some of the Company's subsidiaries have expressly undertaken limited obligations and commitments. These contingent contractual obligations are issued at the subsidiary level and are non-recourse to the Parent Company.
(3) Amount primarily relates to unrealized foreign currency losses in Argentina of $262 million, or $0.37 per share, mainly associated with the devaluation of long-term receivables denominated in Argentine pesos, and unrealized foreign currency losses at AES Andes of $25 million, or $0.03 per share. 92 | 2024 Annual Report (4) Amount primarily relates to gain on sale of AES Brasil of $312 million, or $0.44 per share, a gain on dilution of ownership in Uplight due to its acquisition of AutoGrid of $53 million, or $0.07 per share, and realized gains on cross currency swaps hedging the AES Brasil sale proceeds of $34 million, or $0.05 per share; partially offset by day-one losses at commencement of sales-type leases at AES Renewable Holdings of $63 million, or $0.09 per share, and loss on partial sale of our ownership interest in Amman East and IPP4 in Jordan of $10 million, or $0.01 per share.
(4) Amount primarily relates to gain on sale of AES Brasil of $312 million, or $0.44 per share, a gain on dilution of ownership in Uplight due to its acquisition of AutoGrid of $53 million, or $0.07 per share, and realized gains on cross currency swaps hedging the AES Brasil sale proceeds of $34 million, or $0.05 per share; partially offset by day-one losses at commencement of sales-type leases at AES Renewable Holdings of $63 million, or $0.09 per share, and loss on partial sale of our ownership interest in Amman East and IPP4 in Jordan of $10 million, or $0.01 per share.
As mitigation, AES has invested in thermal, wind, and solar generation assets, which have a complementary profile to hydroelectric plants. These plants are expected to have increased generation in low hydrology scenarios, offsetting possible impacts described from hydro assets. According to the National Oceanic and Atmospheric Administration ("NOAA"), La Niña Conditions are currently observed.
As mitigation, AES has invested in thermal, wind, and solar generation assets, which have a complementary profile to hydroelectric plants. These plants are expected to have increased generation in low hydrology scenarios, offsetting possible impacts described from hydro assets.
Parent Company Liquidity is reconciled to its most directly comparable GAAP financial measure, Cash and cash equivalents , at the periods indicated as follows (in millions): December 31, 2024 December 31, 2023 Consolidated cash and cash equivalents $ 1,524 $ 1,426 Less: Cash and cash equivalents at subsidiaries (1,259) (1,393) Parent Company and qualified holding companies' cash and cash equivalents 265 33 Commitments under the Parent Company credit facilities 1,800 1,500 Less: Letters of credit under the credit facilities (18) (124) Borrowings available under the Parent Company credit facilities 1,782 1,376 Total Parent Company Liquidity $ 2,047 $ 1,409 The Parent Company paid dividends of $0.69 per outstanding share to its common stockholders during the year ended December 31, 2024.
Parent Company Liquidity is reconciled to its most directly comparable GAAP financial measure, Cash and cash equivalents , at the periods indicated as follows (in millions): December 31, 2025 December 31, 2024 Consolidated cash and cash equivalents $ 1,382 $ 1,524 Less: Cash and cash equivalents at subsidiaries (1,372) (1,259) Parent Company and qualified holding companies' cash and cash equivalents 10 265 Commitments under the Parent Company credit facilities 1,800 1,800 Less: Letters of credit under the credit facilities (50) (18) Less: Borrowings under the credit facility (300) — Less: Borrowings under the commercial paper program (79) — Borrowings available under the Parent Company credit facilities 1,371 1,782 Total Parent Company Liquidity $ 1,381 $ 2,047 The Parent Company paid dividends of $0.70 per outstanding share to its common stockholders during the year ended December 31, 2025.
However, AES has already shifted its supply chain outside of China for the vast majority of final products used to build and maintain renewable energy plants in the United States and we expect limited impact to 2025 and 2026 projects due to the recently announced tariffs on China.
However, AES has already shifted its supply chain outside of China for the vast majority of final products used to build and maintain renewable energy plants in the U.S. We expect limited impact to projects scheduled to become operational in 2026 through 2027 due to the announced tariffs on China. The impact of new tariffs, reciprocal tariffs, or U.S.
Recourse Debt Our total recourse debt was $5.7 billion and $4.5 billion as of December 31, 2024 and 2023, respectively. See Note 12— O bligations in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for additional detail. We believe that our sources of liquidity will be adequate to meet our needs for the foreseeable future.
See Note 12— O bligations in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for additional detail. We believe that our sources of liquidity will be adequate to meet our needs for the foreseeable future.
On February 1, 2025, President Trump issued an executive order declaring a national emergency under the International Emergency Economic Powers Act (IEEPA) and imposing a 10% additional tariff on imports from China and on March 4, 2025, this tariff was increased to 20%.
On February 1, 2025, President Trump issued an Executive Order declaring a national emergency under the International Emergency Economic Powers Act (“IEEPA”) with respect to U.S. importation of fentanyl. The President imposed a 10% additional tariff on imports from China, effective February 4, 2025. Effective March 4, 2025, this tariff was increased to 20%.
AES Maritza has previously engaged in discussions with the DG Comp case team and the 99 | 2024 Annual Report Government of Bulgaria to attempt to reach a negotiated resolution of the DG Comp’s review ("PPA Discussions"). There are no active PPA Discussions at present but those discussions could resume at any time. The PPA continues to remain in place.
No formal investigation has been launched by DG Comp to date. AES Maritza has previously engaged in discussions with the DG Comp case team and the Government of Bulgaria to attempt to reach a negotiated resolution of the DG Comp’s review (“PPA Discussions”). There are no active PPA Discussions at present, but those discussions could resume at any time.
As of December 31, 2024, we had $378 million in letters of credit under bilateral agreements, $129 million in letters of credit outstanding provided under our unsecured credit facilities, and $18 million in letters of credit outstanding provided under our revolving credit facilities.
As of December 31, 2025, we had $220 million in letters of credit under bilateral agreements, $117 million in letters of credit outstanding provided under our unsecured credit facilities, and $50 million in letters of credit outstanding provided under our revolving credit facilities.
We expect that additional tariffs on imports from China will increase overall costs for materials and parts that are imported to build and maintain renewable energy plants for the U.S. industry.
The outcome of this process as well as its potential impact on the Company are uncertain. We expect the tariffs on imports from China will increase overall costs for materials and parts that are imported to build and maintain renewable energy plants for the U.S. industry.
The impact of this update resulted in an increase to Adjusted EBITDA of $22 million and $16 million in each of the years ended December 31, 2024 and 2023, respectively.
The impact of this update resulted in an increase to Adjusted EBITDA of $22 million for the year ended December 31, 2024.
We expect current maturities of non-recourse debt, recourse debt, and amounts due under supplier financing arrangements to be repaid from net cash provided by operating activities of the subsidiary to which the liability relates, through opportunistic refinancing activity, or some combination thereof. We have $899 million in recourse debt which matures within the next twelve months.
As of December 31, 2025, the Company also had $616 million outstanding related to supplier financing arrangements . We expect current maturities of non-recourse debt, recourse debt, and amounts due under supplier financing arrangements to be repaid from net cash provided by operating activities of the subsidiary to which the liability relates, through opportunistic refinancing activity, or some combination thereof.
The United States also maintains a Section 301 tariff on certain Chinese made lithium-ion batteries and related components utilized for energy storage systems, with such tariff currently set at 7.5% and increasing to 25% effective January 1, 2026.
The U.S. also maintains Section 301 tariffs on certain Chinese made lithium-ion batteries and related components utilized for energy storage systems, with such tariffs currently set at 25% effective January 1, 2026 (an increase from the previous rate of 7.5%).
The primary uses of cash in the year ended December 31, 2024 were repayments of debt, capital expenditures, repayments of obligations under supplier financing arrangements, and purchases of short-term investments.
The primary uses of cash in the year ended December 31, 2025 were repayments of debt, capital expenditures, repayments of obligations under supplier financing arrangements, and distributions to noncontrolling interests.
While we have taken significant measures to protect against the impact of changes to the IRA, including by implementing a program to ensure our backlog of U.S. renewables projects satisfy IRS safe harbor requirements for qualifying for the ITCs and PTCs, the impacts from any modifications or repeal of the IRA may be material to our results of operations.
While we have taken significant measures to protect against the impact of changes under the 2025 Act to the IRA, including by implementing a program designed to ensure our backlog of U.S. renewables projects satisfy IRS safe harbor requirements for qualifying for the ITCs and PTCs, the impacts of the 2025 Act, the Treasury Action, the Interior Action or future actions that have the effect of modifying or repealing the ITCs and PTCs or adversely impacting renewable energy projects may be material to our results of operations.
Capital Resources and Liquidity Overview As of December 31, 2024, the Company had unrestricted cash and cash equivalents of $1.5 billion, of which $265 million was held at the Parent Company and qualified holding companies. The Company had $79 million in short-term investments, held primarily at subsidiaries, and restricted cash and debt service reserves of $515 million.
Capital Resources and Liquidity Overview As of December 31, 2025, the Company had unrestricted cash and cash equivalents of $1.4 billion, of which $10 million was held at the Parent Company and qualified holding companies. The Company had restricted cash and debt service reserves of $780 million.
Our non-recourse long-term debt is a combination of fixed and variable interest rate instruments. Debt is typically denominated in the currency that matches the currency of the revenue expected to be generated from the benefiting project, thereby reducing currency risk. In certain cases, the currency is matched through the use of derivative instruments.
Our non-recourse financing is designed to limit cross-default risk to the Parent Company or other subsidiaries and affiliates. Our non-recourse long-term debt is a combination of fixed and variable interest rate instruments. Debt is typically denominated in the currency that matches the currency of the revenue expected to be generated from the benefiting project, thereby reducing currency risk.
We have a diverse portfolio of performance-related contingent contractual obligations. These obligations are designed to cover potential risks and only require payment if certain targets are not met or certain contingencies occur.
These obligations are designed to cover potential risks and only require payment if certain targets are not met or certain contingencies occur.
As a result of the bankruptcy filing, AES Ilumina’s non-recourse debt of $22 million continues to be in technical default and is classified as current as of December 31, 2024. The non-recourse debt at AES Puerto Rico is also in payment default. In 2022, mediation commenced to resolve the PREPA Title III case.
The Oversight Board filed for bankruptcy on behalf of PREPA under Title III in July 2017. As a result of the bankruptcy filing, AES Ilumina’s non-recourse debt of $20 million continues to be in technical default and is classified as current as of December 31, 2025. In 2022, a mediation commenced to resolve the PREPA Title III case.
EBITDA, Adjusted EBITDA and Adjusted EBITDA with Tax Attributes We define EBITDA as earnings before interest income and expense, taxes, depreciation, amortization, and accretion of AROs.
There were no such impacts in 2024. 86 | 2025 Annual Report EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes We define EBITDA as earnings before interest income and expense, taxes, depreciation, amortization, and accretion of AROs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

20 edited+4 added−6 removed13 unchanged
For further information regarding market risk, see Item 1A.— Risk Factors , Fluctuations in currency exchange rates may impact our financial results and position ; Wholesale power prices may experience significant volatility in our markets which could impact our operations and opportunities for future growth; We may not be adequately hedged against our exposure to changes in commodity prices or interest rates; and Certain of our businesses are sensitive to variations in weather and hydrology of this 2024 Form 10-K.
For further information regarding market risk, see Item 1A.— Risk Factors , Fluctuations in currency exchange rates may impact our financial results and position ; Wholesale power prices may experience significant volatility in our markets which could impact our operations and opportunities for future growth; We may not be adequately hedged against our exposure to changes in commodity prices or interest rates; and Certain of our businesses are sensitive to variations in weather and hydrology of this 2025 Form 10-K.
The increasing share of renewable energy in Chile's power market may reduce reliance on thermal units and impact power price volatility, which could impact our cost to serve certain unregulated PPAs. In the Dominican Republic, we own natural gas plants contracted under a portfolio of contract sales, and both contract and spot prices may move with commodity prices through 2024.
The increasing share of renewable energy in Chile's power market may reduce reliance on thermal units and impact power price volatility, which could impact our cost to serve certain unregulated PPAs. In the Dominican Republic, we own natural gas plants contracted under a portfolio of contract sales, and both contract and spot prices may move with commodity prices through 2027.
In the normal course of business, we are exposed to foreign currency risk and other foreign operations risks that arise from investments in foreign subsidiaries and affiliates. A key component of these risks stems from the fact that some of our foreign subsidiaries and affiliates utilize currencies other than our consolidated reporting currency, the USD.
In the normal course of business, we are exposed to foreign currency risk and other foreign operational risks that arise from investments in foreign subsidiaries and affiliates. A key component of these risks stems from the fact that some of our foreign subsidiaries and affiliates utilize currencies other than our consolidated reporting currency, the USD.
We enter into various transactions, including derivatives, in order to hedge our exposure to these market risks. The disclosures presented in this Item 7A are based upon a number of assumptions; actual effects may differ.
To hedge our exposure to market risks, we enter into various transactions, including derivatives. The disclosures presented in this Item 7A are based upon a number of assumptions; actual effects may differ.
Interest Rate Risks We are exposed to risk resulting from changes in interest rates primarily because of our current and expected future issuance of debt and borrowing. Decisions on the fixed-floating debt mix are made to be consistent with the risk factors faced by individual businesses or plants.
Interest Rate Risks AES is exposed to risk resulting from changes in interest rates primarily because of our current and expected future issuance of debt and borrowing. Decisions on the fixed-floating debt mix are made to be consistent with the risk factors faced by individual businesses or plants.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Overview Regarding Market Risks Our businesses are exposed to, and proactively manage, market risk. Market risk is the potential loss that may result from market changes associated with AES power generation or with existing or forecasted financial or commodity transactions.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Overview Regarding Market Risks Our businesses are exposed to and, therefore, proactively manage, market risk. Market risk is a potential loss that may result from market changes associated with AES power generation or with existing or forecasted financial or commodity transactions.
AES enters into foreign currency hedges to protect economic value of the business and minimize the impact of foreign exchange rate fluctuations to AES' portfolio. While protecting cash flows, the hedging strategy is also designed to reduce forward-looking earnings foreign exchange volatility.
AES enters into foreign currency hedges to protect economic value of the business and minimize the impact of foreign exchange rate fluctuations in our portfolio. While protecting cash flows, the hedging strategy is also designed to reduce forward-looking earnings foreign exchange volatility.
Our primary market risk exposure is to the price of commodities, particularly electricity, natural gas, coal, and environmental credits. AES is also exposed to fluctuations in interest rates and foreign currency exchange rates associated primarily with outstanding and expected future issuances and borrowing, and from investments in foreign subsidiaries and affiliates.
Our primary market risk exposure is to the price of commodities, particularly electricity, natural gas, coal, and environmental credits. AES is also exposed to fluctuations in interest rates associated primarily with outstanding and expected issuances and borrowings, and foreign currency exchange rates associated primarily with investments in foreign subsidiaries and affiliates.
Foreign Exchange Rate Risk We operate in multiple countries and as such are subject to volatility in exchange rates at varying degrees at the subsidiary level and between our functional currency, the USD, and currencies of the countries in which we operate.
Foreign Exchange Rate Risk AES operates in multiple countries and as such is subject to volatility in exchange rates at varying degrees at the subsidiary level and between our functional currency, the USD, and currencies of the countries in which we operate.
Additionally, certain of our foreign subsidiaries and affiliates have entered into monetary obligations in USD or currencies other than their own functional currencies. Certain of our foreign subsidiaries calculate and pay 115 | 2024 Annual Report taxes in currencies other than their own functional currency.
Additionally, certain of our foreign subsidiaries and affiliates have entered into monetary obligations in USD or currencies other than their own functional currencies. Certain of our foreign subsidiaries calculate and pay 116 | 2025 Annual Report taxes in currencies other than their own functional currency.
Our thermal asset in Panama has PPAs with distribution companies which matches the term of the LNG supply agreement of such thermal assets. New entrants into the Panama thermal generation market could impact the dispatch of existing generation, requiring purchases in the spot market to satisfy the PPA obligations.
Our thermal assets in Panama have PPAs with distribution companies which match the term of the LNG supply agreement of such thermal assets. New entrants into the Panama thermal generation market could impact the dispatch of existing generation, requiring purchases in the spot market to satisfy the PPA obligations.
The volume sold under contracts or retail concessions can vary based on weather and economic conditions, resulting in a higher or lower volume of sales in spot markets. Thermal unit availability and hydrology can affect the generation output available for sale and can affect the marginal unit setting power prices.
Volume variation also affects our commodity exposure. The volume sold under contracts or retail concessions can vary based on weather and economic conditions, resulting in a higher or lower volume of sales in spot markets. Thermal unit availability and hydrology can affect the generation output available for sale and can affect the marginal unit setting power prices.
These amounts represent 2025 full year exposure and do not take into account the historical correlation between these interest rates. 116 | 2024 Annual Report
These amounts represent full-year 2026 exposure and do not take into account the historical correlation among interest rates. 117 | 2025 Annual Report
Due to variation of timing and amount between cash distributions and earnings exposure, the hedge impact may not fully cover the earnings exposure on a realized basis, which could result in greater volatility in earnings. AES has unhedged forward-looking earnings which are exposed to foreign exchange deterioration risk from the Argentine peso that could be material.
Due to variation of timing and amount between cash distributions and earnings exposure, the hedge impact may not fully cover the earnings exposure on a realized basis, which could result in greater volatility in earnings. AES has unhedged forward‑looking earnings exposure to the Argentine peso, which could increase earnings volatility, particularly in times of adverse exchange-rate movement.
The sensitivities are calculated using industry-standard valuation techniques to revalue all transactions (physical and financial commodity transactions) in the portfolio for a change in the underlying prices the transactions are exposed to and excludes correlation effects, including those due to renewable resource availability. The models reference market prices of commodities across future periods and associated volatility of these market prices.
The sensitivities are calculated using 115 | 2025 Annual Report industry-standard valuation techniques to revalue all transactions (physical and financial commodity transactions) in the portfolio for a change in the underlying prices the transactions are exposed to and exclude correlation effects, including those due to renewable resource availability.
In the Energy Infrastructure SBU, the generation businesses are largely contracted, but may have residual risk to the extent contracts are not perfectly indexed to the business drivers.
In the Energy Infrastructure SBU, the generation businesses are largely contracted, but may have residual risk to the extent contracts are not perfectly indexed to the business drivers. This type of market risk exists primarily in California, Chile, the Dominican Republic, and Panama.
As of December 31, 2024, we project pre-tax earnings exposure on a 10% increase in commodity prices to be less than a $5 million gain for power, less than a $5 million gain for gas, and less than a $5 million loss for coal.
As of December 31, 2025, a hypothetical 10% increase in commodity prices would not be expected to have a material impact on consolidated pre‑tax earnings, with estimated impacts of less than a $10 million gain for power, less than a $10 million gain for gas, and less than a $10 million loss for coal.
Additionally, as of December 31, 2024, assuming a 10% USD appreciation, cash distributions attributable to foreign subsidiaries in the Colombian peso, Euro, and Argentine peso individually, may be exposed to exchange rate movement of less than a $5 million loss.
Additionally, as of December 31, 2025, a hypothetical one‑time 10% appreciation of the U.S. dollar applied to forecasted 2026 cash distributions, net of outstanding hedges and with all other variables held constant, indicates that cash distributions attributable to foreign subsidiaries in the Colombian peso, Euro, and Argentine peso may each be exposed to exchange‑rate movements resulting in less than a $5 million loss.
As of December 31, 2024, the portfolio’s pre-tax earnings exposure to a one-time 100-basis-point increase in interest rates for our Argentine peso, Chilean peso, Colombian peso, Euro, and USD denominated debt would be less than $15 million on interest expense for the debt denominated in these currencies.
Most of our interest rate risk is related to non-recourse financings at our businesses. As of December 31, 2025, a hypothetical 100‑basis‑point increase in interest rates would be expected to increase annual pre‑tax interest expense by less than $10 million, based on the portion of the Company's debt that is subject to variable interest rates.
Prices and volatilities are predominantly based on observable market prices. Exposures at individual businesses will change as new contracts or financial hedges are executed, and our sensitivity to changes in commodity prices generally increases in later years with reduced hedge levels at some of our businesses.
Commodity price exposure at individual businesses may change over time as contracts mature and hedging positions are adjusted, and although longer‑dated forward commodity prices are generally less volatile, our sensitivity to changes in commodity prices may increase in later years due to lower levels of forward hedging at some of our businesses.
Removed
Commodity Price Risk Although we prefer to hedge our exposure to the impact of market fluctuations in the price of commodities, some of our generation businesses operate under short-term sales, have contracted electricity obligations greater than supply, or operate under contract sales that leave an unhedged exposure on some of our capacity or through imperfect fuel pass-throughs.
Added
Commodity Price Risk AES generally seeks to hedge its exposure to commodity price risk; however, certain generation businesses may retain limited unhedged positions due to short‑term sales structures or contractual mismatches between supply and obligations. As a result, a portion of operating results may be exposed to changes in market prices for electricity, fuels, and environmental credits.
Removed
These businesses subject our operational results to the volatility of prices for electricity, fuels, and environmental credits in competitive markets. In addition, our businesses are exposed to lower electricity prices due to increased competition, including from renewable sources such as wind and solar, because of lower costs of entry and lower variable costs.
Added
Increased competition, including from renewable generation and the growing penetration of energy storage systems, may exert downward pressure on electricity prices in certain markets. AES employs risk management strategies designed to limit the impact of commodity price movements on consolidated financial performance. These strategies may include the use of physical and financial commodity contracts, futures, swaps, and options.
Removed
We employ risk management strategies to hedge our financial performance against these effects. The implementation of these strategies can involve the use of physical and financial commodity contracts, futures, swaps, and options. We have some natural offsets across our businesses such that low commodity prices may benefit certain businesses and be a cost to others.
Added
The portfolio also benefits from natural offsets across businesses, as changes in commodity prices may positively affect certain operations while negatively affecting others. Actual results may differ from modeled sensitivities due to local market conditions, including hydrology, regional supply and demand dynamics, fuel supply constraints, competition and bidding conditions, and regulatory interventions such as price caps.
Removed
Exposures are not perfectly linear or symmetric. The sensitivities are affected by a number of local or indirect market factors. Examples of these factors include hydrology, local energy market supply/demand balances, regional fuel supply issues, regional 114 | 2024 Annual Report competition, bidding strategies, and regulatory interventions such as price caps. Volume variation also affects our commodity exposure.
Added
The models reference market prices of commodities across future periods and associated volatility of these market prices. Prices and volatilities are predominantly based on observable market prices.
Removed
These numbers have been produced by applying a one-time 10% USD appreciation to forecasted exposed cash distributions for 2025 coming from the respective subsidiaries exposed to the currencies listed above, net of the impact of outstanding hedges and holding all other variables constant. The numbers presented above are net of any transactional gains or losses.
Removed
Most of our interest rate risk is related to non-recourse financings at our businesses.

Other AES 10-K year-over-year comparisons